Now the east costal area of china is in a big quarantine moment. There are more than 25 million people in shanghai has to stay home since end of March. The nearby Jiangsu and Zhejiang province have the same trend to to follow shanghai step.
It is a big challenge to all manufacturer in this area. For sure as a producer for abrasive products, Binic group has to face a big challenge that never happen before. Hereby are some main issues and our solution.
Now the shanghai office is shut down since 25th Mar. And all our staff is now in home office. So far there are still some shortage of food supply in certain area. Central Shanghai is ok in general. But the situation is not so good in north and west part of shanghai. Several of our employee has caught virus and waiting for transfer. One of them are our bookkeeper. We said the only good side of those affection is no need to pay our supplier right now.
BSP tools (Taizhou) is still fully function. This daughter factory is located in center Jiangsu, 300Km from Shanghai. Main production is resin bond cutting off disc and grinding disc. There are some Omicron cases in the nearby counties But still it is operational. In the meantime the new facilities for coated abrasives are under construction. The only issue is the workers who come from center china has to submit PCR test result to local administration every day.
BSP tools( kunshan), only 40km from shanghai which produce diamond tool, has to be shut down completely. The local authority worry shanghai pandemic will flood in Kunshan. So it follow dynamic 0 policy. most production facility in kunshan has been suspended. It is estimate that people can go back to work around 17-20th Apr
Now the biggest issue so far is the traffic barrier for each province, each city and even each county. They are turning against each other for requesting local permits. Some logistic company have to remove all the cargo to another vehicle when it come to a border of another administration zone. It is almost 30% the whole east part of china are affected. In general, we can still buy all material. Only with the freight cost surge up 30-40%. and have to wait least one week more to get the final goods.
Shanghai harbor has been closed since end of March. Now we have to sent most of our goods to Ningbo harbor, where we rented a temporary warehouse for storage and package. In the meantime we take some train route for our customer in Europe. It is in general 15% higher than sea freight but only 21 days can reach to customer hands. Now situation in Ningbo harbor is not stable as some cases are detected in these area. We are discussing to arrange our goods to Xiamen, Qingdao or Tianjing when the situation go worse.
It is very strange this time even with big scale quarantine and logistics problem, the material cost still maintain the same or even come to less
The fibre glass for 115 x 1.0mm cut off wheel has dropped 2%
The resin bond is 2% lowered than last year
All the abrasive still maintain the same price
We think since the War start in Ukraine, the demand for abrasives finish products has dropped dramatically. Now also the Omicron pandemic in east china block the demands as well. So the supply chain come to stable so far. Even though, the whole binic abrasive group has prepare the material for at least 5 month production. We will do our best to make a good service to our customer.
We sincerely hope this pandemic will be gone soon. People can start go out to make their living, companies can run as before. Also let us pray for the world peace.