COVID-19 Developments 4/6/20

India, Argentina, oil, and recommended reading

Make in India. Indian Prime Minister Narendra Modi told government ministers that “India needs to lessen its dependence on other nations...all departments [should] maintain an objective index on how their work will promote Make in India.” In a separate but related development, India decided to partially lift its export ban on hydroxychloroquine and paracetamol, subject to approval by the Ministry of External Affairs.

What it means: India decided it could lift export restrictions after reportedly receiving 150 million tonnes of active pharmaceutical ingredient imports (APIs) from China; the government would not have made the decision to lift restrictions just because US President Trump (among others) asked India to do so. The 150 million tonnes figure seems a bit questionable, but still, the bottleneck in pharma supply chains dependent on China for APIs seems to be abating, at least for now. Modi is pushing to use the dislocation caused by COVID-19 to achieve his goals of strengthening the self-sufficiency of India’s economy as well as boosting Indian exports.

Argentina defaults. The President of Argentina announced that Argentina will defer principal and interest payments on U.S.-dollar denominated debt until December 31, or until the Argentine Ministry of Economy decided it could. The decree only applies to securities issued in the domestic market; Argentina is still in the process of formulating an offer to restructure roughly $69 billion worth of privately held foreign debt.

What it means: Argentina was supposed to have proposed a plan for debt-restructuring on March 31 but pushed the timeline back at least two weeks. While it is possible that this decree will give the Argentine government a little more room to breathe in dealing with foreign-law debt, and while Argentine President Alberto Fernández has reportedly been adamant about not defaulting, it is fairly easy to envision a scenario in which this technical default is a prelude to a larger-scale default, or at least a more steep-than-anticipated haircut on outstanding foreign debt.

Oil. OPEC+ postponed a meeting that was scheduled for today to discuss oil production cuts. The CEO of Russia’s sovereign wealth fund said the meeting would “likely” take place on Thursday and that Moscow and Riyadh were “very, very close” to a deal. Interfax reports that Russia and Saudi Arabia will only make production cuts if the United States joins in. OPEC is reportedly hoping that the UK, Brazil, and Norway will join the meeting on Thursday in addition to North American producers.

What it means: Over the weekend, U.S. and Canadian officials reportedly discussed imposing tariffs on Saudi and Russian oil imports if the Russians and Saudis are not able to reach a deal. Canada is also reportedly attending Thursday’s OPEC meeting. It is hard to imagine the US reducing production even if such a thing could be ordered from on high in Washington -- and it can’t. The Texas Railroad Commission is holding a hearing on April 14 to discuss production limits in the state. I confess I don’t see how a deal materializes if it is contingent on U.S. participation. 

Honorable mention

This is an amazing book review from 1988 about the German city of Hamburg and how it dealt with cholera in the 19th century; its insights are directly applicable to the pandemic we face today.

China’s ambassador to the US wrote a column in the New York Times acknowledging recent “unpleasant talk” between the two nations but insisting that the two sides should come together in “solidarity, collaboration, and mutual support.”

China’s government published a timeline about its behavior and informational disclosures when COVID-19 first emerged in an attempt to deflect global criticism.

Israel’s emergency unity government has hit a snag as Benny Gantz’s Blue and White accused Benjamin Netanyahu’s Likud of backtracking on an agreement related to judicial appointments; if they aren’t careful, there won’t be an emergency by the time they conclude their talks.

Chinese co-founder of Alibaba Jack Ma announced he was making another huge donation of medical equipment to African nations, including 500 ventilators.

Brazil imported 38 percent more corn in March than compared to the previous year.

China expects a 10 percent decline in soybean imports year-on-year in April in part due to logistical issues in South American ports.

An infectious disease expert in South Korea said that COVID-19 remaining latent in certain cells in the body may explain why some are testing positive for the virus after recovering.

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