This long read from The Guardian encapsulates all that is right about global capitalism (eg. lightning fast responses to business opportunities and human needs which can be monetised) and everything else which gives it a bad name (eg. the ever pressing need to loot the needy). Samanth Subramanian explains that even now nobody is clear whether wearing a mask all the time is a good thing or bad thing: “No one even seemed to know precisely how useful masks were, or who should wear them. The advice we got was a mess. The World Health Organization maintained, at first, that healthy people had no need for masks. But people bought masks anyway. Shelves were emptied. People improvised. A friend of mine in Tel Aviv ended up fashioning one for herself out of her husband’s boxer shorts – washed and dried, she assured me, and slid over her head like a balaclava. Then, in early April, the WHO reversed its counsel, and a host of governments followed suit, which sparked a fresh run on mask stocks.”
As a result of the WHO’s edict we all now wear masks but, like in everything else we consume, a hierarchy has emerged rapidly: “We have been living with the coronavirus long enough now that we can distinguish the various tribes of mask-wearers. Note the shopper in the pasta aisle, clad in a classic white N95 with the 3M manufacturer logo just under the snout. The N95 and its equivalents keep out nearly every particle larger than 0.3 microns, and although the virus is tinier, the fibres in the mask’s layers obstruct its passage. These masks are meant to go first to healthcare workers, which might explain the shopper’s furtive, guilty eyes. Note the finance bro out for his allotted hour of jogging, wearing a Vogmask – a brand so stylish that its midnight-blue model might even match his suit when he eventually returns to the City. Note the extreme worrier in the GVS Elipse P100, the heavy-duty mask that promises to keep out 99.97% of particles. In the age of Covid-19, the equivalent of sensible shoes may be the simple surgical mask or the home-hemmed cloth. The gaps in their weave are big enough for the virus to pass through, but they do at least protect others from the wearer’s sneezes and coughs.”
The shortage of masks has obviously created a business opportunity for masks brokers and just like investment banks hawking loans launch an NBFC when they see how much money lenders make, mask brokers are now becoming mask manufacturers. The article profiles a HK based entrepreneur who has morphed from running a digital payments company to becoming a mask broker and now a mask manufacturer to who hopes to sell each mask for 6 British pounds (Rs 500). The cost of making and transporting these masks is actually less than one British pound.
So now for the billion dollar question: why exactly are the masks in short supply? “The pandemic has brought on a global shortage of masks, which is really a global shortage of one particular plastic inside the masks – a type of non-woven polypropylene that acts as a filter. In casual conversation, people in the mask business call the plastic “meltblown”, referring to how its plastic filaments are made. Meltblown goes into many things: jackets, nappies, filters in water purifiers and air conditioners. Masks are in short supply not because they’re difficult to produce, but because the meltblown industry is used to stable, long-term demand. It churns out just enough for its customers and no more. To install an assembly line of meltblown takes many months, even at the calmest of times; with demand now soaring, some companies supplying meltblown equipment are quoting timelines of up to two years to even deliver a new machine.
Hot out of the plant, meltblown looks like a giant toilet roll: 15,000 yards or so of polypropylene wrapped around a cardboard core. The material feels like synthetic cloth, but it’s so thin that you might accidentally put your finger through it, an executive at one American meltblown manufacturer told me. He asked to keep his and his company’s names out of this article, for a reason I’ve never been given before. They don’t want to be known more widely, he said: “We’re so overburdened with enquiries already. If any further information gets out, that’s another thousand messages coming in every day. That makes it impossible to do any work.” Until last year, just 2 or 3% of his company’s meltblown went into face masks, he said. This year, it’s 95%.”
If you want to read our other published material, please visit https://marcellus.in/blog/
Note: the above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India as a provider of Portfolio Management Services. Marcellus Investment Managers is also regulated in the United States as an Investment Advisor.
Copyright © 2022 Marcellus Investment Managers Pvt Ltd, All rights reserved.