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.
The World Bank has just published its semi-annual report on the state of commodity markets. presents a detailed market analysis and price forecasts for the main raw materials.
Consult the information on timber market:
This edition of April 2020 focus on special analysis : « A Shock Like No Other: The Impact of COVID-19 on Commodity Markets » and « Set up to Fail? The Collapse of Commodity Agreements. »
As highlighted in this report « The outbreak of COVID-19 has been accompanied by widespread declines in commodity prices. The combination of both major demand and supply shocks occurring simultaneously is unprecedented among previous events. The mitigation measures taken to control the spread of the virus have resulted in an unprecedented collapse in oil demand and the steepest one-month decline in oil prices on record.
In the short-run, in addition to weaker demand, disruptions to supply chains could cause dislocations in the consumption and production of other commodities and imperil food security. »
Slower economic growth is likely to further reduce demand for raw materials.
The ultimate impact of the pandemic will depend on its severity and duration, but it is likely to have lasting implications. Changing consumer behavior could cause a structural shift in work patterns, reducing travel and demand for fuel. An unwinding of complex global value chains may occur, which could reduce commodity demand.
On April 27, 2020, at a press conference, Chancellor Rishi Sunak announced a new rapid loan scheme program to help small and medium enterprises. « Loans of between £2,000 and £50,000 are on offer, with the Government to guarantee 100% of the loan with no fees or interest to pay for the first 12 months. »
This program is part of the business support mechanism, which includes business subsidies, tax deferrals and a job maintenance program, which are already helping to support hundreds of thousands of small businesses.
Discussions on re-launching activities are ongoing. According Nick BOULTON, Head of Technical and Trade « It looks like business will have ‘freedom in a framework’, with the Government tipped to opt for a principle rather than prescriptive based approach according to workplaces rather than sectors. »
This approach would put people’s safety first: « health first », leading companies to think about the mix of different workplaces they have and how each can and should be treated differently. There is not yet a clearly defined overall plan.
Cooperation and universal acceptance of human health safety principles will be essential for the successful reopening of businesses.
David Hopkins, TTF CEO, reminds that « Given the complexity of supply chains, there can be no repoening unless all are onboard. »
The considerable differences in responses to the pandemic between African countries do not facilitate the analysis of the impact on the timber industry. However, it is certain that measures to combat the pandemic have led companies to significantly reduce their workforce, and that African economies will be affected by the fall in export revenues from the timber sector in the coming months.
In its April 24, 2020 article « Impact of the pandemic on the African tropical timber market: survey, analysis and price information », GWMI reports on the prices of log and sawnwood export prices:
REPUBLIC OF CONGO
The extension of the state of health emergency for 20 days from 21 April is accompanied by a strengthening of the control system at entry points, particularly in terms of logistics, with the installation of permanent health and law enforcement teams.
With regard to the timber industry, the difficulties in adapting operations to government measures appear to be lessening. Most companies have put in place the necessary measures and are now operating at the minimum authorized by the decree. However, this implies a reduction in the workforce and a reorganization of planning, particularly for activities in the forest. Of all the companies surveyed, spread throughout the country, the estimated average number of employees maintained does not exceed 20%.
For the time being, the aim is to meet demand by evacuating available stocks, which will help to alleviate cash flow difficulties.
Furthermore wood sector companies are also facing the rainy season which is causing a double negative impact on the industry. They are waiting for opportunities and support from the government.
A process of gradual lifting of the confinement of the commune of Gombe began on 21 April 2020, however the state of health emergency declared on 24 March 2020 is extended until 8 May 2020.
According to the COVID-19 Response Team, the peak of the pandemic is expected in the second half of May 2020.
Economically, activities are currently blocked. Imports are primarily reserved for the pharmaceutical and food sectors. No exports of precious materials, including wood. Companies are inactive, they do not operate.
From the Council of Ministers on Friday 24 April 2020, the Government took some measures mainly to preserve purchasing power and to control the national production. These include all taxes and duties exemptions on the production, import and sale of medicines and medical equipment, and the suspension of VAT, which will also benefit the forestry sector. According to the Government, additional measures could be taken to address the crisis and to support the national economy.
Since the entry into force of the first preventive measures against COVID-19 on 18 March 2020, because of the movements are forbidden (entry and exit of wood cargoes), several timber orders have not been done or cancelled. By now, Social commitments within companies have become more worrying to be resolved by business leaders.
All specific measures to foster timber companies activities from the Government and any support would help them to bounce back.
Furthermore, following the announcement of the state of health emergency on 24 March 2020, Kinshasa Digital and the National Agency for Clinical Engineering, Information and Health Information (ANICiiS) undertook a quantitative study to assess the level of awareness, needs, fears and reactions of the population to COVID-19. The objective is to support the COVID-19 Response Unit on the orientations to be taken to accompany the population. The information is collected through an online survey, notably circulated on social networks: Facebook, WhatsApp, Twitter, LinkedIn. In terms of social and economic impact, the responses obtained from 2 to 14 April 2020, based on the participation of 718 people, representing 26 provinces of the DRC, raise, among other things, the direct consequences of the pandemic situation on work habits, the price increase on the market as well as the difficulties in implementing barrier measures.
« 24% work at home, 17% can no longer work, almost 14% have had to change their working hours, 13% have less work and 14% are unemployed. » The biggest difficulty at the moment is the price increase on the market. 54% of the participants say that social distancing is another difficulty they face.
In his annoucement on 27 April 2020, the Prime Minister announced the implementation of a new partial and geographical containment system for the Grand Libreville. The mitigation of the containment is linked to a massive screening, the revision of the health contingency plan and the reorganization of the patient management system.
However, the new curfew schedules, from 6:00 pm (instead of 7:30 pm) until 6:00 am, means a readjustment of rotations for night shift and seems difficult to respect for factories and forestry sites. More details in the following documents:
Behind the logistical difficulties, the unclear post-crisis outlook to date and other concerns related to the consequences of COVID-19, wood industry companies have taken steps to implement government measures. In particular, producers have taken protective measures and are facing difficulties step by step. Contracts are on board, but there can be delays at times.
Companies are doing their best to fulfill their contracts and to insure the goods on board.
To date, no cancellation of orders is envisaged. Given the situation, most customers accept delivery postponements and new contracts.
As regards the domestic market: demand has fallen sharply. Demand is very much based on wood for terraces or household use. While suppliers of furniture and interior fittings are encountering more difficulties, the Building sector is continuing its activity, particularly in the construction of healthcare infrastructures.
On the international market: China is boosting orders, and is concentrating demand in Okoumé in particular, but at lower prices.
The free movement of lorries and technical staff, exempted from the authorisation previously validated by the competent administration, contributes to the improvement of the working environment.
The SPIB is currently involved in work on access to financial support to help companies with their administrative procedures. And for good reason, the eligibility conditions are slow to be put in place. It should be pointed out that this is a refundable support.
In addition, forest controls have intensified in order to combat illegal logging. Indeed, it is in times of crisis that illegal logging thrives.The SPIB has asked the Ministry of Forests to carry out these missions with great intelligence so as not to penalise the work of operators whose activity is already fragile.