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U.S. big bucks turn global face mask hunt into ‘Wild West’

A medical protective mask is seen as the spread of the coronavirus disease (COVID-19) continues in Hanau, Germany, April 3, 2020. (REUTERS/Kai Pfaffenbach)

By Richard Lough and Andreas Rinke

The global scramble to secure face masks to shield frontline workers from the coronavirus has turned the marketplace into the “Wild West”, with the United States often ready to outbid buyers who have already signed deals, officials from Europe to the Americas say.

In France and Germany, senior officials said the United States was paying far above the market price for masks from No. 1 producer China, on occasion winning contracts through higher bids even after European buyers believed a deal was done, and Brazil’s health minister reported a similar incident.

“Money is irrelevant. They pay any price because they are desperate,” one high-level official in German Chancellor Angela Merkel’s ruling CDU/CSU group told Reuters.

A German government source said: “Americans are on the move, carrying a lot of money.”

Since the virus was first recorded in China late last year, the pandemic has spread around the world. Governments in Europe, the Americas and elsewhere are desperately trying to build up supplies for medics, nursing home staff and the public.

Now, with global cases surpassing one million and the outbreak exploding in the United States, the competition for precious stocks is intensifying further.

In one case, an order of 200,000 masks for Germany made by U.S.-listed multinational 3M Co in China were “confiscated” in Bangkok, Berlin Secretary of Interior Andreas Geisel, said in a statement, calling it an “act of modern piracy.”

“Even in times of global crisis you shouldn’t use Wild West methods,” he said, adding that he assumed the switch happened in connection with an export ban by the U.S. government.

The State Department and the agency within the Department of Homeland Security (DHS) coordinating U.S. efforts to locate and procure protective equipment did not immediately respond to requests for comment.

However, a DHS official told Reuters this week that U.S. companies and the government have been paying above market price for much of the gear purchased overseas.

The official, who requested anonymity to discuss the matter, said the United States would not stop buying “until we have way too much” and could still be searching out protective gear abroad through August.

“We’ve gotten our hands on every bit of it that we can,” the official said.

At the same time, 3M said Friday that the White House ordered it to stop all shipments to Canada and Latin America of respirators that it manufactures in the United States, despite what 3M called “significant humanitarian implications.”

Lea Crager, a spokeswoman for the Federal Emergency Management Agency (FEMA), the agency coordinating the search for medical supplies abroad, said disasters often lead to price increases for certain goods.

“If it causes some sort of a supply chain disruption, you’re going to see costs rise for an essential commodity,” Crager said. “It just happens.”

Bavarian state premier Markus Soeder described the medical supplies marketplace as the “Wild West.”

In Brazil, Health Minister Luiz Henrique Mandetta said this week that China had ditched some Brazilian equipment orders when the U.S. government sent more than 20 cargo planes to the country to buy the same products.

“Our purchases, which we expected to complete in order to be able to supply, many were dropped,” said the minister in an interview on Wednesday.

On Thursday, Mandetta said Brazil had finally succeeded in placing a 1.2 billion reais ($228 million) order for equipment, although it will only be delivered in 30 days.

CASH IN HAND

A second German source employed by a company now helping Merkel’s government to order masks said the last weekend of March had been a turning point, and drew a link with the United States’ increased presence in the market.

Contracts no longer guaranteed delivery, the source said, adding: “Demand is much, much bigger than supply.”

And it may be about to soar again.

The Trump administration, which has wavered on the value of face masks for people showing no symptoms, looked set late on Thursday to advise all Americans to wear masks when venturing out.

In France, three regional leaders painted a similar picture. Jean Rottner said it was a constant fight to ensure mask orders arrived in his Grand Est region, where the outbreak first took hold before spreading west towards Paris.

He said consignments were changing hands at the last minute.

“On the (airport) tarmac, the Americans get out their cash and pay three or four times what we have offered,” Rottner told radio RTL France on Wednesday.

Rottner’s counterpart in the greater Paris region, Valerie Pecresse, said she had been beaten to an order by a country with deep pockets, although she did not name the United States.

“We found supplies a few days ago but failed to buy them after others outbid us,” Pecresse told Franceinfo radio on Friday. “They were prepared to pay three times the market price.”

The French Foreign Ministry said it was verifying the reports. But one official doubted that action would be taken.

“It boils down to market forces,” the official said. “The one who pays the most gets the prize.”

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