In connection with the outbreak of coronavirus in China, the market for equipment and components is waiting for a significant shortage. But until August this should not be a critical problem.
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If we talk about how the outbreak of coronavirus in China affected the global market for equipment and components, and it will change it, it is worth remembering that any effect on this market is significantly delayed in time.
However, the global trend is already noticeable: today, almost all manufacturers of computer components have suffered from the epidemic. Along with them, losses are also suffered by manufacturers of PCs, laptops, and all electronics.
This is primarily due to the introduction of quarantine measures for the movement of labor in China for three reasons:
- people cannot usually get to factories after the Chinese New Year;
- The Chinese government has officially increased the number of New Year's holidays;
- Some enterprises were temporarily closed to exclude mass crowds contributing to the spread of the disease.
As a result, a limitation or complete halt of the work of several industries. According to some estimates, the power loss among large manufacturers of PCs and laptops will be about 50-60%, which will lead to a noticeable shortage of goods in the global market.
Here I would also like to debunk the myth of the "danger" of Chinese components.
According to the World Health Organization, on average, coronavirus lives on surfaces for up to six days, and its maximum life span outside the human body is nine days.
So by the time components or equipment arrive at the Pakistani customs warehouses, the virus will, in any case, lose its properties.
The problem for the market here lies instead in the fact that the predicted deficit is already beginning to be felt in the component market since all components are a high-turnover product.
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Some vendors have already significantly reduced confirmation of orders, thus reducing the availability of goods by 2–3 times and introduced quotas for deliveries.
Recently, it was reported that China has extended the blocking of rail freight from/to Wuhan and other cities in Hubei Province until March 10. Exporting goods by sea or air from Wuhan is also significantly difficult.
In addition to transport restrictions for the virus-infected Hubei province, the sending of freight trains to the EU from Yiwu and Zhengzhou was also delayed until early March.
At the same time, this should not create a special problem for the Pakistani distribution market, because the main wave of supply shortages will fall on the traditionally low season of April-May.
So in the first months, a certain supply shortage will even help Pakistani companies unload the warehouse. Now we are already experiencing a certain shortage of equipment and components, and if current trends continue, the deficit will increase.
But stocks accumulated in distribution warehouses will be able to level this shortage within 1-2 months. So, if the problem is solved in the next couple of months, the Pakistani market will not suffer much.
If the epidemic of the coronavirus continues to grow, and restrictions continue or intensify, we will face a very severe deficit. Namely, with quotas for deliveries, truncated assortment, as well as with rising prices.
However, it is quite difficult to predict how much prices will rise since it is not yet known how events will eventually develop.
For example, the Japanese automobile concern Toyota has already resumed partial operation of all four of its plants in China, previously stopped due to an outbreak of coronavirus.
Many machinery suppliers whose plants are located in other countries are in a hurry to find replacement parts made in China. If this happens promptly, production capacities will be partially resumed.
