3M mask cost rises further 66%.

The forecasted mask price rise has exceeded expectations. The Aeotec Health team today notes that prices for 3M N95 masks suitable for surgical use have risen a total of 66% throughout the course of this past week.

Facial mask pricing have now risen near on 600% since November.

Coronavirus mask prices expected to rise further.

Despite already having risen 500% since November, the Aeotec Health team is forecasting a further price rise for protective face masks this week.

At the source, we’re noting that prices for the raw material used to make the middle-layer on most masks increased today. Giving some days’ buffer for new pricing to trickle down to manufacturers, we’re advising partners that to anticipate a price rise of US$0.10 to US$0.21 per mask unit by the week’s end.

Coronavirus, isolation, and their impact upon product demand.

We touched on supply-side demand when we looked at the Chinese export data from March 2020. It showed a (to be expected) surge in demand for products which could be used in the global fight against the COVID-19 pandemic. But what of demand-side? With large swathes of the population in isolation, what products have spiked and which have declined?

Stackline has tracked the USA’s 100 fastest growing and fastest declining e-commerce categories.

In the growth category, number 1 could be guessed – disposable gloves match Chinese export data perfectly. But 2 and 8, a desire for carbs and abs, aren’t reflected as prominently in supply-side data. As for declining categories, they heavily reflect that people aren’t travelling as much and aren’t planning to for the foreseeable future.

Buyers caught unawares by Chinese spiritual holiday.

Another strain for buyers of COVID-19 response tests and equipment.

Many governments and NGOs are attempting to source direct from China of late, hence the numerous risks and scams targeting inexperienced buyers. Compounding problems for those scrambling to assess the quality of makers and purchase product is China’s Qingming Festival. Focussed on remembering ones ancestors, Qingming is presently being observed by China. That means that through till Tuesday 7 April, a lot of China is closed for business and sourcing is nigh on impossible unless deep relationships have already been established.

Coronavirus and geopolitical stressors resulting from lack of preparation.

In a sign of the stress that the COVID-19 pandemic is placing upon supply chains and manufacturers alike comes actions likely to provoke geopolitical rifts;

KN95 masks now able to be imported into USA.

KN95 masks are the Chinese equivalent of what you’re more likely to know as N95 face masks.

Facing a deepening supply crisis for PPE inclusive of face masks, the US’ FDA has clarified its stance on the import of KN95 certified masks;

“The FDA is not blocking KN95 mask importations,” said Anand Shah, the agency’s deputy commissioner for medical and scientific affairs in an interview.

But he added that even though the agency will allow importers to bring the equipment into the country, they would be doing so at their own risk. Unlike normally certified devices, or those authorized on an emergency basis, KN95 masks would have none of the legal protections or other support provided by the federal government.

Aeotec Health has observed that the demand for N95 masks has seen prices rise some 500% since November. Without heavy demand, their KN95 equivalent have remained in abundant supply and significantly cheaper within China.

How many masks will be needed in the USA during the COVID-19 outbreak?

There’s an interesting data point in a 3M press release today;

…this week, we secured approval from China to export to the U.S. 10 million N95 respirators manufactured by 3M in China.

10 million feels a big number. But it’s sadly a blip. Current government estimates indicate that the USA will require some 3.5 billion face masks though the course of the COVID-19 outbreak.

Tracking price increases for masks.

After yesterday’s missive on this week’s PPE price increases, the Aeotec Health team has looked at price increases specifically impacting face masks. They’re a technology that are in short supply in the face of unprecedented demand. That’s why various advisories have been issued in the US telling people to cover their face yet there have been no instructions to wear a face masks; there simply aren’t enough face masks for medical professionals, let alone for everybody.

Pricing is also an issue (but less so for governments’ deeper pockets). Pricing for face masks has risen some 500% at the source since November 2019. China’s definition of mask filter layers as effectively a national resource has been a key exacerbation, so too has been this week’s introduction of stricter export controls. While the latter has been a boon unit pricing for COVID-19 focussed masks, it is also a quality win with fake and mislabelled masks now less likely to be exported outside China.

PPE pricing increases.

In brief; along with prices rising for certified COVID-19 tests, Aeotec Health’s team have noted that pricing for PPE equipment, inclusive of masks, have also rise some 50% to 75% throughout the week. We anticipate that pricing this week’s average pricing will have risen some 100% come Monday.

Constrained supply see COVID-19 test pricing increase.

China’s revocation of the rights for most COVID-19 test makers to export has seen available supply of the kits heavily constrained over the past 24 hours. Demand remains at all-time-highs, however.

That combination of supply and demand has led to the obvious outcome: increased prices. The Aeotec Health team has noted that the price of certified, tested, and exportable kits has risen some 100% on average at the source.

UK purchases 2m kits; some won’t deliver.

Interesting news in British tabloids today with reports that the UK government has purchased 2 million coronavirus antibody tests from China.

The country has purchased the IgM / IgG antibody detection kit type and has reportedly done so without validating the accuracy of the tests. It’s known that they’ve purchased from two separate makers in China, one of whom is Hangzhou AllTest Biotech Company Limited. The Aeotec Health team has been able to assay AllTest and has confirmed that neither the company nor the test kits meet the revised requirements for the export of COVID-19 tests from China. Therefore, all kits ordered by AllTest are set to be stuck at customs and never depart China for the UK.

Re-domiciled supply appearing globally.

That both Spain and the Czech Republic have purchased inferior coronavirus tests has give rise to the notion that test ‘made in China’ are all bad. That’s not the case of course; one of Aeotec Health’s test suppliers has provided over 5 million tests to China’s governments without issue.

All the same, the notion is giving rise to a number of governments and medical networks trying to source product that isn’t made in China. Nearly all are failing.

As touched on in our earlier note, Aeotec has previously been told of test kits exported from China to Europe where they have been rebranded as ‘made in Europe.’ We’ve today learned of exports of similar, unlicensed tests being exported from China to Taiwan and then on to other regions. One specific scam sees the products exported to South Korea where they are then rebranded as Korean made. We’re told that at least one government I the Far East has already been duped by the rebranding scam, having ordered South Korean products in the hope that they were made there. They weren’t.

The source suppliers of these products are excluded from Aeotec Health’s list of reputable makers of COVID-19 tests kits.

British coronavirus maker limits sales to UK.

One of the few providers of rapid type COVID-19 tests, Belfast-based Biopanda Reagents, has today announced that it is limiting the sale of its kits to UK health care providers only.

Biopanda Reagents’ test is of the IgM and IgG variety with the parts similar, if not directly sourced, to those used in China.

The change comes on the back of the PRC limiting the supply and export of similar kits from China.

Limitations in place on export of PPE from China.

Along with legal changes limiting the export of COVID-19 medical tests, China’s Ministry of Commerce has increased regulations on the export of medical masks, medical protective clothing, ventilators, and thermometers.

These changes continue to focus on ensuring that the manufacture and export of such products is conducted only by suitably licensed businesses.

China limits export of COVID-19 tests.

We’ve long shared with partners that many of the COVID-19 rapid test kits being exported from China don’t meet medical standards, including in China itself. Many such kits have been developed and sold by startups or otherwise young companies with no medical expertise or background in medical testing.

We’ve also warned that supplies for legitimate makers have been running short in the face of a run on untested, unreliable, and wholly cheap kits.

Today the government of China has taken action to prevent the export of poor quality tests. The same action also helps ensure that the supplies and components needed made to manufacture legitimate and clinically trialled tests remains available.

In a note which the Aeotec Health team shared with partners on 31 March, we wrote;

Please note that start 00:01 Beijing time, the Ministry of Commerce of the People’s Republic of China has implemented new laws and requirements which impact the production and export of COVID-19 medical tests and protective / preventative equipment.

In short, announcement #5 of 31 March 2020 by the PRC places restrictions on the manufacture and export of all related tests and equipment that have not been manufactured with the correct combination of licenses and certifications. All goods related to announcement #5 will be inspected by Chinese customs. Those without the correct combination of licenses and certifications in place will be impounded and confiscated

Announcement #5 applies to all coronavirus tests, rapid or otherwise, medical masks, medical protective clothing, ventilators, and thermometers.

Aeotec Health’s sourcing team has worked today to secure a complete understanding of the new and necessary licenses and certifications. We have a number of suppliers in place accordingly and, given that the number of qualified suppliers is extremely low, have begun negotiating exclusivity agreements with them already. Others have done the same and we see the time window as shorter than 24 hours for purchase orders to be placed.

We expect this to affect global supply and demand immediately. For our European partners, regulated and certified PRC made tests and Bosch’s 3-hour invasive test will become the only 2 available options for the time being. We have encountered some PRC made kits being imported into Europe and rebranded as ‘made in Europe’ once within Europe’s borders. We expect the Chinese sources for this illegal activity to dry up within the first few weeks of April.

Changes incoming in China.

Key partners and suppliers of the Aeotec Health team have advised that China’s Ministry of Commerce is expected to make changes sometime in the next fortnight to constrain the export of COVID-19 test kits. It is unclear if the change is related to ensuring only quality products are exported from China and, therefore, geopolitical or if the changes are related to ensuring supply of enough reliable kits for China’s domestic market.

Poor quality tests could be 80% inaccurate.

In an update to Spain’s case against poorly sourced and unlicensed COVID-19 tests, comes word from the Czech Republic where tests from Shenzhen Bioeasy Biotechnology were also supplied.

Word in the Czech Republic is that of the 150,000 rapid tests supplied, 80% are deemed faulty. The Czech Republic paid US$5.46 per test, making them above the current market rate for improperly certified or uncertified tests made in China.

70% inaccuracy with improperly sourced coronavirus test kits.

The Spanish government appears to be the first major victim of improperly sourced COVID-19 rapid test kits. Health agencies in the country had purchased a total of 9,000 kits from Shenzhen Bioeasy Biotechnology. Spain found that the tests were accurate only 30% of the time.

Shenzhen Bioeasy maintain that the low success rate was caused by user error. Despite attempting to shift the blame, the Chinese Embassy in Spain has distanced itself from the company and publicly announced that none of its donations to the country have included product from Shenzhen Bioeasy.

Subsequent to the publishing of this report, the government of Georgia announced that it had already purchased such test kits from Shenzhen Bioeasy and was suspending its relationship with the tainted firm. Further, a Chinese government regulatory group has announced an investigation into the company and its products.

Note: Shenzhen Bioeasy has never featured on Aeotec Health’s list of approved rapid test-kit makers having previously failed our team’s due diligence process.

BOSCH develop on-site, 3 hour COVID-19 test.

Certainly not as fast as the rapid tests we’re seeing developed in China, though with a different outcome focus and test method, German maker BOSCH, in partnership with UK medical technology company Randox Laboratories, has announced the successful development of a COVID-19 test.

Like those developed to combat coronavirus in China, the low-invasive test offers results through nose or throat swabs and offer an accuracy of greater than 95%.

The fully automated test is expected to ship in late April.

Most in-demand China exports March 2020.

The impact of COVID-19 / coronavirus upon the global supply chain continues to be felt both in availability of supply and on-going demand.

Current-month export data received by Aeotec from 3rd parties has shown that the largest growing segment of exports from China corresponds with products needed to fight the global pandemic, particularly personal protective equipment. The top 10 includes;

  • latex gloves
  • hand sanitzer
  • face masks
  • eyewear goggles
  • full-body suits
  • shoe coverings
  • COVID-19 test kits
  • no-touch temperature guns

The Aeotec Health team continues to qualify and validate potential manufacturers and suppliers of the above products.