SOURCE / ECONOMY
China's mask factories below 30% operating capacity as profits dry up
Published: Jan 20, 2021 08:18 PM

Workers make face masks at the workshop of a face mask company in Dingzhou,north China's Hebei Province, Feb. 18, 2020.File photo:Xinhua


 
After ramping up to supply the world, the Chinese mask-making industry is facing a glut, resulting in shutdown of many factories across the country. Industry insiders said that up to 90 percent of the mask plants closed in the second half of 2020 after profits fell sharply that barely covered the costs of production.

The market slightly rebounded this winter when some parts of China saw sporadic coronavirus outbreaks, and demand also came from countries like the UK as new waves of the pandemic took hold. However, the majority of the nation's mask producers are grappling with overcapacity, and many are on the brink of bankruptcy.

The owner of a mask factory in East China's Anhui Province surnamed Yang said on Wednesday that the factory price of a surgical mask is now 0.1 yuan ($0.01), which no longer covers production cost. The factory could produce hundreds of millions of masks, but it has cut capacity by half and more reductions are expected in the coming months.

"The mask price is fluctuating every day and week, and it might go up ahead of the Spring Festival, but the price is already at rock bottom," said Yang.

A manager with another factory in East China's Jiangsu Province said that it is selling off "millions" of masks in stock before the factory shuts ahead of the Spring Festival.

"The market has become saturated, making it very difficult for small producers like us to make a profit," said the manager, noting that it is selling KN95 masks below production costs. "We expect to clear these out within weeks," said the manager.

At one point last year, Chinese mask capacity was enough to cover 10 times the world's demand, Bai Yu, president of the Medical Appliances Branch of the China Medical Pharmaceutical Material Association, told the Global Times earlier.

When reached by the Global Times on Wednesday, however, Bai said that up to 90 percent of the mask factories had shut down in the second half of last year, and although there's been some recovery, the overall operating capacity is less than 30 percent.

"Given the huge surplus of masks, most producers no longer can cover their cost of production," said Bai.

Data released by the General Administration of Customs showed that from March to the end of December 2020, Chinese customs inspected exports of 438.5 billion yuan worth of PPE materials, including 224.2 billion face masks, equivalent to nearly 40 face masks for every person in the world outside China.






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