In February, at the height of the coronavirus epidemic in China, masks were in short supply.

The reason was simple: the government pretty much mandated that everyone of the 1.4 billion population should wear a (disposable) mask when they go out; and the factories were unable to get their workers back for production.

Many friends in logistics were busy sourcing for masks everywhere (as far as Peru and Chile) to send to China.

Fast forward one month, the outbreak in China is largely under control, however Covid-19 has become a pandemic sweeping across the globe.

200 million pieces a day

Mask shortage, however, became no longer an issue in China. Industry insider estimated that currently there are close to 50 thousand mask manufacturers, with a daily production capacity of 200 million pieces.

This is how it looks like once the manufacturing machine in China is back in full force:

Many of the additional capacity comes from existing manufacturers expanding capacity or large manufacturing companies refitting their production lines. For example, BYD, a battery and car manufacturer, now has a daily production capacity of close to 10 million pieces, according to its founder Wang Chuanfu.

Opportunistic new players

There are also a lot of new players, being opportunistic and trying to make some quick buck. This is especially the case now people realise that the demand for export is rising much faster than domestic need.

As a result, the cost of procuring the production line surged, and many brokers are trying to sell downstream.

However, as the production capacity of meltblown non woven fabric is not able to scale as fast, the price of masks has not yet collapsed.

It is important to note that many of the new players are not yet certified and their products might not meet the standards. Many are under-reporting their production capacity in fear of both tax and potential government drafting.

Dynamic landscape

We are in a precarious situation where demand supply dynamics change on a daily basis, as the pandemic is.

A lot of manufacturers have reached out to us to look for export buyers. Well, we are not in this trade. But if you are interested in procuring masks (and other medical suppliers/equipment) from China, we are happy to link you up directly with suppliers.

Just drop us a note at hello@mworks.asia

 

—

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.