How COVID-19 Impacted on Wood Based Panel in Chemicals & Materials Industry ?
COVID-19 Impact on Wood Based Panel in Chemicals and Materials Industry The COVID-19 pandemic has influenced the whole planet with its major impacts on the economy and businesses across the globe. The COVID-19 spread worldwide in unprecedented ways due to its high infectious and contagious nature and lack of availability of its vaccine. As a result, the greatest medical challenge in the 21st century is yet to be faced by physicians worldwide. Though the emergence of the virus can be traced back to Asia, many European countries along with the U.S. have been struck massively by the pandemic. The virus has spread across all regions ranging from North America, Europe, Asia-Pacific, Middle East, and Africa up to South America. The COVID-19 has been declared as a pandemic by World Health Organization (WHO) due to its increased spread across the globe. After the declaration of the pandemic, various countries announced the complete lockdown such as India, China, and other Asian countries to decrease its spread. According to the situation report of 7th June 2021 by WHO stated 174 million cases of the corona have been reported globally and 3.7 million patients are dead due to the coronavirus. On a slightly positive note, a total of 157 million people have recovered and a total of 1.9 million vaccine doses have been administered as well. Due to the outbreak of COVID-19, demand for wood-based panels from various end-users such as residential & commercial buildings, schools, malls, and hotels is impacted due to the lockdown imposed by various national governments globally. Due to lockdown restriction, all manufacturing activities are put on hold due to lack of labour & raw material supply, which limits the demand for wood-based panels in the market. For all the key segments of the forest sector (wood harvest, sawmills, wood-based panels, pulp and paper, and wooden furniture), the biggest impact from COVID-19 was the disruption of cross-border trade, which sharply dropped in the first three quarters of 2020 compared to the same period of the previous year. Aftermath of COVID-19 and Government Initiative to Boost the Market After the COVID-19 pandemic, the wood-based panel market is expected to gain momentum due to the increasing demand from various end-users. Government of an economy and their policies plays an important role in revamping the global economy back to its anterior state. Currently, many policies are being formulated by governments for creating employment along with the utilization of resources for bringing production and sales in the market back to their previous glory. During the pandemic, various nations’ governments took immediately drastic steps to curb the increase in contamination with COVID-19 by restricting travel, closing international borders. While the various government has eased restrictions to allow the manufacture and export/import of the various goods. For Instance · European commission has issued a decision that allows for import duty and VAT relief for goods to combat the COVID-19 outbreak. Relief from import duties and VAT for goods to combat the COVID-19 outbreak is issued in Europe as a government measure to boost the country’s economy However, the governments of various nations are also trying to revive the economy with strategic decisions such as revival package of initiatives to support the small, medium, and large industries, including guaranteed loans, the micro to medium-sized enterprises were provided government support for workers’ wages, to cover interest payments on loans and to provide operating capital. Other benefits include deferral of payments on corporate income tax for businesses, including the elimination of interest payments on outstanding loans for up to three months. Strategic Decision for Manufactures after COVID-19 to Gain Competitive Market Share Although the COVID-19 pandemic has disrupted the global economy, various manufactures are trying to take market share in the region with their various CSR programs. Various international organizations of wood-based panels are also holding a virtual conference to look at furniture & design trend movements, the performance of global wood-based panel markets, and an update on innovative technologies in the wood-based panels. For instance: · Wood-Based Panels International (WBPI) holds a half-day virtual event on May 11, 2021, to look at how the international wood-based panels industry has adapted to the current pandemic, with a special focus on furniture trends Impact on Price COVID-19 has complicated the situation by depressing the various industry sectors' growth across the globe. The economic downturn weakens the demand in local as well as global markets. Due to the spread of the COVID-19 pandemic, the price of the raw materials increased drastically which in turn increased the price of lumber panels. Other factors that put upward pressure on lumber prices are the increasing cost of manufacturing and transportation. Various stakeholders are involved in the production chain of procuring, harvesting, transporting, and processing logs into lumber. Labour shortages during COVID-19 caused an increase in labour cost which has transferred to the price of lumber. For instance: · According to Random Lengths, the price of framing lumber rose to USD 1,494 per thousand board feet (mbf) in May 2021, a 250% increase when compared to USD 427 per mbf a year ago. Meanwhile, the price of structural panels jumped to USD 1,657 per thousand square feet (msf) from USD 414 over the same period, a 300% increase Impact on Demand The nationwide lockdowns imposed by the government of different nations. Most of the people are stuck at home, working from the home beginning in March 2020 encouraged many people to perform home repairs or upgrades such as outdoor decks or new wooden furniture. The high demand for houses, lower interest rates, investments in rental real estate, have resulted in high demand for lumber and structural panels. For instance: · To support the economy during COVID-19, the U.S. Federal Reserve decreased the federal funds rate to zero in March 2020, which encouraged people to enter the housing market. Historically low-interest rates have contributed to high housing demand which, in turn, raises lumber prices Impact on Supply Chain Due to the outbreak of COVID-19 globally, supply chain partners have experienced their challenges and may not be able to fulfil orders on time during the pandemic. This is primarily due to the restrictions on the movement of transportations across different countries as well as within the countries. Most of the industries are lacking workforce availability for production whereas some industries are not able to get the orders due to less demand in the market from the end-users. So overall this pandemic has affected very badly on most of the industries across the globe. For Instance: · As per a survey conducted by the Institute for Supply Chain Management on the European supply chain, it is found that nearly 75% of companies reported supply chain disruptions due to the corona virus-related transportation restrictions. In this way, the lack of workforce and demand for products from end-users has disrupted the supply chain network of the industries. Conclusion Pandemic has taken a toll on every aspect of life, including the global economy. With the significant downfalls in many sectors, a collaborative effort of government, industry players, and consumers can win the fight against COVID-19. It continues to inflict the world with appalling economic and social dilemmas, capable enough to leave severe backlash on the economy for the next several years. The first wave had already inflicted severe blows to the population as well as the economy. The currently experiencing second wave is expected to be more disastrous not only to the masses but also to CnM markets. The first wave of the COVID-19 has affected most North American & European countries such as the U.S., Mexico, Germany, France, Spain, and the U.K., among others. This pandemic has led to a disturbance in the demand and supply of wood-based panels from the end-users. Currently, the second wave of the COVID-19 is going on and it has again disturbed the economic development in the region. However, now governments are trying to get more and more people vaccinated so that spread of the virus can be controlled and economic disruption can also be minimized as compared to the first wave of the COVID-19. Ongoing relaxation in lockdown across the various regions such as North America & Europe is expected to help in the revival of the global market.