Impact of Covid 19 on timber trade

15.05.2020
News

COVID 19

For information on the progress of the spread and the disease situation: https://www.worldometers.info/coronavirus/ We bring you here, and will continue to do so in the coming weeks, the information provided by our members and partners regarding the tropical timber market and the activities of companies in Europe, Africa and Asia.

FRANCE

“FAIR&PRECIOUS” Forest managers commit to the fight against COVID-19 in Central Africa.

Paris, May 4th, 2020 – The forestry companies that are members of the ATIBT (Association Technique Internationale des Bois Tropicaux) have swung into action to counter, at their level, the development of Covid-19 in Africa. Their objectives: to protect their employees and the indigenous populations, but also to pursue the activity of a responsible sector essential to the economic balance of these countries, where wood is one of the most important contributors to the public treasury.

On 11 May, a new chapter begins with the implementation of the progressive deconfinement plan. Its objective: to preserve a balance between the need to resume economic activity and the need to preserve the health of the French people. To this end, the Ministry of Labour has drawn up a national deconfinement protocol, thus completing the 48 trade guides drawn up in partnership with professional federations and social partners.

With regard to State aid:

  • The solidarity fund is maintained until the end of May to take into account the drop in activity.
  • Employers’ social security charges for March, April and May will be totally abolished for sectors forced to close down administratively.
  • In order to allow the resumption of activity, masks will be available at pharmacists, tobacconists, in supermarkets, on digital platforms, with VAT at 5.5%.
  • Companies in difficulty may continue to benefit from the partial activity scheme until 1 June. It will then be gradually adapted to support the recovery of activity if the epidemic is under control.

UK

Prime Minister Boris Johnson’s announcement of the gradual deconfinement on 10 May is accompanied by the “reconstruction plan” which starts on 13 May.

The Prime Minister stated that « This document sets out a plan to rebuild the UK for a world with COVID-19. It is not a quick return to ‘normality.’ Nor does it lay out an easy answer. And, inevitably, parts of this plan will adapt as we learn more about the virus. But it is a plan that should give the people of the United Kingdom hope. Hope that we can rebuild; hope that we can save lives; hope that we can safeguard livelihoods.

It will require much from us all: that we remain alert; that we care for those at most risk; that we pull together as a United Kingdom. We will continue to work with the devolved administrations in Scotland, Wales and Northern Ireland to ensure these outcomes for everybody, wherever they live in the UK. »

The @instituteforgov* has distilled 48 pages into one graphic in Twitter.

David Hopkins, CEO of TTF, also points out that the plan sets out a timetable and basic principles as well as a step-by-step approach for moving forward.

The TTF head of Technical and Trade, Nick Boulton, worked on this plan to extract specific advice for the timber industry.

ARGENTINA

As part of the fight against Covid-19, after the closure of the borders on 16 March 2020, containment, “isolation, preventive and compulsory social” measures have been put in place by Argentina since Friday 20 March 2020, and at least until Sunday 24 May 2020 inclusive, no travel outside the home is allowed except in the case of specifically provided exceptions.

Since 11 May, however, these measures have been relaxed throughout Argentina, with the exception of the city and province of Buenos Aires and cities with more than 500,000 inhabitants, which remain under strict containement.

This has had a major impact on the timber industry. According to a survey carried out by the Argentinean Federation of the Wood Industry (FAIMA) between 21 and 23 April 2020, logging is among the most affected sectors where sales have plummeted by more than 70% in the last month.

According to the results relayed by GWMI on May 8, the survey highlights on the one hand the difficulties of sawmills and furniture manufacturers in accessing the financial support announced by the government to alleviate the crisis, and on the other hand the inconveniences that has resulted from the break in the payment chain since the beginning of the isolation.

According to the information they have disclosed, 72% of companies (most of them with 1 to 19 employees) believe that they will not be able to pay the April’s salary or that – at most – they will be able to pay 50%.

Román Queiroz, secretary general of FAIMA, says that « the impact of the fall on sales is alarming. Companies went decapitalised to meet commitments and are now in a situation of very high financial fragility ».  In addition, according to his words : « We are probably going through the worst moment in the wood and furniture industry of the last 50 years ».

AFRICA

Published on May 10, 2020, the report of the Economic Commission for Africa (ECA) entitled: « Covid-19 : Lockdown exit strategies for Africa », proposes seven deconfinement strategies for a sustainable economic recovery.

« The ECA estimates that a one-month full lockdown across Africa would cost the continent about 2.5 per cent of its annual GDP, equivalent to about $65.7 billion per month. This is separate from and in addition to the wider external impact of COVID-19 on Africa of lower commodity prices and investment flows. »

« With the lockdowns came serious challenges for Africa’s economies, including a drop in demand for products and services; lack of operational cash flow; reduction of opportunities to meet new customers; businesses were closed; issues with changing business strategies and offering alternative products and services; a decline in worker production and productivity from working at home; logistics and shipping of products; and difficulties in obtaining supplies of raw materials essential for production. »

« According to the UN agency, it is essential that African countries take advantage of this delay in the spread of the pandemic to learn from lessons learned from other regions and from their experiences of deconfinement. »

Furthermore, at an online press conference on 11 May 2020, Stephen Karingi, Director of the Regional Integration and Trade Division at ECA said that the African Continental Free Trade Area (AfCFTA) could help African economies recover from the impact of COVID-19. As he said : « Boosting intra-African trade can serve as an alternative stimulus package for job creation, foreign exchange, industrial development and economic growth». 

However, in view of the health emergency, the priority of which is to save lives, the 1 July 2020 start date for trade under the AfCFTA has been moved to at least 1 January 2021.

Mr. Karingi said such delay offers a window of opportunity for creative thinking on how the AfCFTA can be reconfigured to reflect the new realities and risks of the 21st century, stating “this is needed to better position the African economy in the face of future adverse shocks emanating from novel viruses and climate change, among others.” He emphasised the need to maintain the AfCFTA momentum and ambition that existed before COVID-19. This, he said, will enable Africa recover and build long-term resilience.

REPUBLIC OF CONGO

The state of health emergency that was to have been lifted on 10 May is extended until 31 May 2020.

On 8 May 2020, a global and complete plan to gradually lift the lockdown was submitted to the government by the National Coordination for the Management of the Coronavirus Pandemic (Covid-19), assisted by the Task Force.

Shipping of goods and maritime freight operates without hindrance at the port of Pointe-Noire, although problems with the stock of wood products are beginning to be felt.

Pending the lifting of containment and the recovery plan, Congo is preparing to distribute free protective masks to the population.Out of an order for 1.5 million protective masks, 777,000 have already been delivered by the Ministry of Small and Medium Enterprises, Handicrafts and the Informal Sector.

Several solidarity initiatives have been launched, notably by companies in the Timber industry for the benefit of employees and the local population, including :

CIB-OLAM has committed 300 million CFA francs (US$495,000) to relief efforts against COVID-19, including donations of PPE, medical equipment and test kits to health clinics, as well as public awareness campaigns :

  • Construction of a quarantine zone for confirmed cases and reception of suspected cases adjacent to the IBC-OLAM hospitals.
  • Training in barrier gestures in all its concessions
  • Setting up an ambulance evacuation plan for confirmed cases in partnership with the town hall and the prefecture,
  • Installation of an immunoanalysis system in the laboratory of its clinic and supply of COVID-19 detection kits to carry out large-scale tests on all its employees.

INTERHOLCO has launched a Citizen Alliance campaign allowing :

  • The implementation of civic and educational measures for employees and their families in the region in collaboration with government authorities,
  • The installation of a sanitary cordon at the gates of the industrial site,
  • Encouraging local dressmakers to form a cooperative to meet the local population’s need for masks,
  • The development of the state health centre in the village of Ngombé into a COVID-19 care unit, providing access to water, electricity and equipment in beds and mattresses; the company’s medical centre will continue to serve the population,
  • Communication and sensitization of forest dwellers to barrier gestures thanks to the training and materials given.

The inflation rate continues to rise in the Republic of Congo, standing at 2.3% in the fourth quarter of 2019, compared to 1.2% in 2018 for the same period. Year-on-year, the analysis of the general price level shows an inflation rate of 3.8%, which is above the community threshold of 3%.

GABON

Companies are operating with many difficulties, mainly logistics are a problem. Accelerating problems could lead to more people being laid off.

After a total containement of 15 days, return to partial confinement with a reminder of the protection/prevention barriers (social distancing, hand washing and compulsory wearing of masks).

Concerning boats and exports, lack of empty containers and part of the containers embarked in LIBREVILLE/OWENDO transit through Pointe Noire which can lead to significant delays.

In response to the Gabonese government’s call for solidarity, timber industry companies are ensuring the adoption of barrier measures among their respective employees. Each is respectively in charge of the forest sites, the life bases, as well as supporting the local administrations and NGOs that have submitted specific problems related to the COVID crisis.

VIETNAM

While Vietnam’s export market shares of wood and wood products, mainly to the United States, Japan, Europe and China, and account for more than 85% of the industry’s total export value, the spread of the pandemic in all countries has led to the suspension of importers’ orders.

According to Vietnam’s General Customs Department, in the first half of March, exports of timber and wood products dropped to US$447 million from almost US$1.6 billion cumulatively in the previous two months.

Export sales and the industry’s growth rate are expected to decline more sharply in the future as the disease progresses seriously and develops in a complicated manner in major export markets.

According to the results of a survey reported in the GWMI publication of 14/05/2020, out of 124 large wood-processing companies more than 51% of the companies have downsized their production scale. 35% of companies will have to temporarily cease operations soon. Only 7% of companies are still operating normally, with uncertainties related to the pandemic.

Since mid-March, the pandemic has led to serious disruptions in the global supply chain, with many contracts delayed or cancelled. Businesses continue to receive notifications from their partners about longer delivery times, cancellation of delivery, even for batches of products that have been manufactured or are being manufactured with immediate consequences on declining revenues forcing companies to reduce their workforce.

CHINA

In GWMI’s May 8 publication « Tropical log imports in the first two months of 2020 amounted 1.30 million cubic metres, down 26% year on year and accounted for 17% of the national total. »

According to the observations « most of countries from which tropical log imports declined greatly included Equatorial Guinea (- 58%), Solomon (-54%), the Republic of Congo (-45%) and Cameroon (-42%). » Furthermore, figures reported by the Chinese customs show a drop in the average prices (in US$/cu.m CIF) of imported logs and sawnwood in February 2020 compared to the previous month. See details.