When a good friend of mine said that 38% of Americans who responded to a recent survey said they wouldn’t buy Corona beer due to concerns about the virus, I said, “There’s no way that is true!” But hysteria has a strange way of making people do unexplainable things.
The story was based on a survey by 5W Public Relations, a public relations firm that works with the alcohol and spirits industry. As you probably know, which beer you drink has nothing to do with the virus, unless someone with that virus previously drank out of the same can or sneezed into it. Then, that might be a big problem.
Looking specifically at the responses, PR Week reported that only 4% of those who regularly buy Corona said they are going to stop and 16% of American beer-drinkers were confused about whether Corona is related to coronavirus. What this shows is that optics matter. And the trade messaging is improving in regards to U.S. logs and lumber heading to China. It seems the only thing that could derail the improvement is the coronavirus. At the same time the financial markets have gone haywire as companies brace for poor first quarter earnings due to slowdowns in China and globally connected to the coronavirus and related containment practices. The United States is facing tough times locally as COVID-19 spreads forcing restrictions and business closures.
After the COVID-19 crisis subsides, things could get better for hardwood producers that are able to hold on. Focusing on the lumber trade, the trade war restrictions appear to be easing for some U.S. resources and wood products. Based on reports from the Agricultural Specialist at the U.S. Embassy in Beijing as well as the Chinese Ministry of Finance, the Chinese government removed tariffs on U.S. hardwood lumber on February 28, 2020 for one year.
According to China’s State Council Tariff Commission, some hardwood products will no longer receive a levy and are eligible for refunds. This includes: oak lumber and logs, cherry and ash lumber, and “other” hardwood lumber and logs. It is not clear at this time if some other hardwoods products will still be taxed. The National Hardwood Lumber Association (NHLA) recently stated, “Work is underway to define exactly what that will mean for these products and what the definite tariff rate will be moving forward.”
According to Tom Inman of the Appalachian Hardwood Manufacturers, Inc., James Xu of AMForest China talked about the latest developments during a recent speech to U.S. hardwood executives.
Xu, a director of the China National Harwood Council, told hardwood leaders that he is upbeat about the return of US. hardwood markets in China. He said it will likely not be at the same levels of previous years, but the demand for U.S. hardwood lumber remains strong.
Over the past few months, numerous news reports have indicated that the coronavirus has caused much of the Chinese shipping industry to come to a standstill. Shipping volumes are way down and sea containers are waiting to be loaded. But the Chinese economy appears ready to restart just as the U.S. economy is close to being on lockdown.
In the last two weeks, COVID-19 has thrown the entire United States into a crisis situation. Read the article on page 26 about ways that pallet companies can weather this situation and prepare for the future.
What does an elimination of Chinese tariffs on U.S. hardwoods mean? While it is good news to U.S. sawmills, many are hesitant to throw a party yet. The reason is that nobody knows how long the coronavirus will plague global economies, including the United States.
Any news to help the hardwood sector is good news for the pallet industry. We have to all wait and see and keep our fingers crossed. In the meantime, don’t be afraid to sit back and drink a Corona. That’s one thing you can do in this crazy time to feel a little bit more normal.
