The untethered outbreak of coronavirus and its impact on print - The Noel D'Cunha Sunday Column

Even as China is in a lock-down, PrintWeek discusses the challenges the crisis presents to the Indian print and packaging industry. Industry leaders and traders and suppliers are starting to voice concerns about quarantines and roadblocks as a response to coronavirus; many of them predict shortages ahead.

This Sunday Column looks at how the coronavirus outbreak is sparking fears of a recession, even as market experts and pundits are saying we will not know where we are until Drupa 2020

01 Mar 2020 | By Noel D'Cunha

A friend of PrintWeek is in China. He has been bunkered down in a village. The last ping we received from his was, "All safe, hopelessly stuck. Probably another month." This was a month ago. PrintWeek's news desk has not heard from him since then.

It all began at a seafood wholesale market in China's Wuhan city. Since then, the Noval Coronavirus or Covid-19 has hit China. And not just China, there are fears of a coronavirus outbreak. The virus has travelled across borders to Japan, Vietnam, South Korea, Iran, and Italy as well as Australia, New Zealand, Israel, Lithuania, Nigeria. Even as I am writing this, I hear Pakistan has reported its first case.

China’s economy is expected to witness its worst slump in two decades; the aftershocks are rocking the global markets big time. The BSE and NSE tumbled 2.5% each on 28 February 2020 amid sell off in the global markets. These are ominous signs for the Indian economy, which is seeing a sluggish performance.  

As activity remains subdued in the world’s second-biggest economy, the impact of domestic demand and international supply chains in China and global market, will see a profound effect.

One of the top news has been the impact coronavirus is going to have on Apple’s financial forecast. The company has high stakes in China, both in terms of its operation and consumer. This could be a signal for other manufacturing majors.

Many airlines have suspended flight to and from China and Hong Kong. With many governments issuing travel advisories, travel plans have been shelved.

What is Covid-19 ?
It is caused by a member of the coronavirus family that has never been encountered before. Like other coronaviruses, it has come from animals. Many of those initially infected either worked or frequently shopped in the Huanan seafood wholesale market in the centre of the Chinese city.

Have there been other coronaviruses?
Severe acute respiratory syndrome (Sars) and Middle Eastern respiratory syndrome (Mers) are both caused by coronaviruses that came from animals. In 2002, Sars spread virtually unchecked to 37 countries, causing global panic.

Indian print industry and the implications
From an industry point of view, printing machinery exports by countries totalled USD 98-bn in 2018. China stood as the largest printing machinery exporter in the world with a recorded value of 17.7-bn, which is around 18% of total printing machinery exports.

According to Kamal Chopra, a key member of the All India Federation of Master Printers, who works closely with the industry in China, "The use of Chinese machinery and equipment, especially in the pre- and post-press areas, is close to 70%. With restriction on transport between China and other countries, the printing industry may witness a short supply of goods, spares and other material(s)."

   Kamal Chopra of the AIFMP

Chopra says he is feeling the effects. "There’s short supply of chemicals, varnishes and foils in the market. Most of these are imported from China."

CP Paul, managing director at APL Machinery, is of the opinion that there are segments of print, where the Indian players have a strong domestic presence. One is printing plates. "TechNova can cater to 75% of the Indian market. So that’s partially taken care of. The rest can be filled by Vietnam and neighbouring countries."

CP Paul of APL Machinery

Chopra however, cautions about price hikes. "My personal feeling is that there will be challenges in supply of inks and chemicals, if the conditions in China does not improve in the next couple of months."

The paper supply
Mumbai-based Jay Raj Fine Paper, specialists in fine and commodity grade papers imports coated paper from China, mostly from two mills APP and Chenmin.

PrintWeek has learnt APP does not have any units in this province but Chenmin has a pulping unit and a tissue unit in this province. There has been no shipment of paper from China for more than a month. Firstly it was due to the Lunar holidays and then due to the coronavirus crisis. Hiren Karia, director at Jay Raj, says, "The epicenter of this virus, Wuhan in Hubei province, China has been completely cut off, so are the major ports in China. This has resulted in shortage in coated paper across India."

Two local mills namely BGPL and JK are already over booked due to government and private tender orders which in November and December. Korean mills have been soliciting orders from USA, Europe, Australia and other countries due to the crisis in China. "These mills have increased their prices by approx. USD 0.70 to USD 0.90 in the last two months. They have also reduced the allocation to Indian market due to better price realisation in other markets," says Karia.

Hiren Karia of Jay Raj

However, Karia says, APP has assured that their units are not affected due to coronavirus and the company will start the shipments to India by February-end once the staff joins back to work, and port and logistics in China in other parts normalise. "Let's wait & watch," he says.

Many paper traders who spoke to PrintWeek spoke about an impending price increase. One trader in Kolkota said, "A price hike is inevitable. It’s time for the printer and newspaper body and associations to get its act together and protect their own interests and our economy by dedicating the necessary resources to stop this problem. But tragically, we have neither a Plan A nor a Plan B."

The ink supplies
Indian ink companies are heavily dependent on China for several raw materials like pigments, photoinitiators and solvents. The bad news: Some of the ink majors have no alternate sources.

But Hubergroup India’s managing director, Ashwani Bhardwaj says, Hubergroup is fully aware of how our customers rely on us for their daily requirements of products we supply them. The good news, he shares, "As of now we are well covered on all raw materials sourced from China."

Ashwani Bhardwaj of Hubergroup

Bhardwaj adds that this has huge implications on business and manufacturing activity outside China. And though Hubergroup India has started taking proactive measured to find alternate sources, Bhardwaj says, if supplies from China are delayed beyond March, it will impact manufacturing in India. He says, "Many local raw material suppliers are also dependent on China. However, latest news from China is encouraging as many suppliers have confirmed about resumption of supplies."

BS Kampani, CMD of Young Concepts India, a healthcare and knowledge-based company whose holding companies are YC Inks and, says, it’s time we realise how important China is in terms of supplies. "The shortages will not only affect the ink industry, but more importantly in medicines too, where the effects are going to be even worse. Even simple painkillers like paracetamols or antibiotics like neomycin required for treating the symptoms may not be available."

BS Kampani of Young Concepts India

  • Interpack has confirmed 303 exhibitors from China. Not to count of the visitors expected to travel.
  • China Pavilion at various shows has been cancelled or no-show. Shows are being postponed.
  • Three big shows - Metpack, Drupa and Interpack
  • In the market, suppliers are already expecting Asia footfall will be severely affected. Now, with Europe under the influence, story may be different.
  • CPhI Southeast Asia and Japan postponed
  • Many companies, even UBMs, have issued precautionary warning to their employees of not travelling internationally

Impact on machines and parts
PrintWeek spoke to suppliers of printing press as well as post-press machinery. The situation will be grim if things do not normalise.

"Safety is first, and we have to avoid travel to China. This would mean postponement of some capital investment decision by our customers," says packaging industry veteran, Puneet Agarwal, managing director, DGM India.

On the positive side, Agarwal says, DGM’s India factor will play a vital role in supporting DGM products, while the Indian team can support the Asian installation.

Puneet Agarwal of DGM India

One of the key suppliers of wide-format equipment requirements is China. According to PrintWeek's estimate, 60% of the wide-format market in India is still driven by solvent printers, and a large number of these are supplied by Chinese manufacturers.

The virus is already disrupting the wide-format print economy. Smarth Bansal of Colorjet, an Indian company which specialises in wide-format printing machines, says, as the further trade gets disrupted and demand for commodities turns soft, local Indian importers are likely to feel the heat.

For Colorjet, it’s a time to gear up to meet the market demands. "We have invested in indigenous manufacturing and contribute 75% value addition due to in-house capability with CNC, LVDs, laser and other machines. Our dependability on China is negligible. Once the stock of existing dealers deplete, we can step in to meet the demand," says Bansal.

Smarth Bansal of Colorjet

The Drupa show must go on
According to the exhibitor list, Drupa 2020 has 360-plus exhibitors from China on its show. There have been fears that the local and global trade shows outside of China may be delayed or cancelled owing to disruption in travel, health and safety concerns. Already Fespa has been downsized. Likewise Printing South China, Sino Labels, and Asia Packaging & Printing Industry Exhibition (APPI), are postponed.

Tradeshows in China have extended their dates beyond June, as a result the Chinese manufacturers of printing machines and equipment's are facing great slump because it is not possible to export / sale the goods. Workers have not been getting complete pay for the last couple of months or so, says Chopra.

But Messe Dusseldorf, which will also host two biggest industry trade fairs, Interpack and Drupa at Messe Dusseldorf in May and June 2020, has sent a no-nonsense signal that the show will go on. "There is currently no reason to postpone or cancel upcoming trade fairs. For the next events, there is an unchanged high level of approval from exhibitors and visitors,” said a statement. "Safety for all employees, customers and guests is a top priority for Messe Düsseldorf. This also applies to the current coronavirus (2019-nCoV), which is currently spreading worldwide."

A lot depends on how the spread of coronavirus is contained. NDTV’s latest report shared Raghuram Rajan's advice as global growth slows over spread of coronavirus. The former head of the Reserve Bank of India, says, "The best economic tonic for the coronavirus shock is to contain its spread and worry about stimulus later."

Meanwhile it is crystal clear, the world economy is slowing (as a result of Coronavirus) ... At the beginning of this year, China and the rest of Asia (including India) looked likely to account for two-thirds of global growth this year. Now China is at a standstill. What next?

WP? magazine tips 

  • Use surgical masks, hand sanitisers and anti-bacterial wipes
  • Educational outreach to driver-partners and commuters on precautions such as increasing ventilation of the car by not using the recirculation mode of the car’s AC
  • Observing hygiene practices like sanitising door handles and seats
  • Washing one's hands with soap
  • Do temperature monitoring and contact tracing
  • Seek early medical help if they have a fever, cough and difficulty breathing, and share their travel history with healthcare providers
  • Avoid direct, unprotected contact with live animals and surfaces in contact with animals when visiting live markets in affected areas
  • Avoid eating raw or undercooked animal products and exercise care when handling raw meat, milk or animal organs to avoid cross-contamination with uncooked foods.

If this outbreak has caused you to cancel your trip or has affected you in any way , write to us about it

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