Mexican drug cartels struggle during coronavirus, hike prices as lab supplies from China dry up

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Mexican drug cartels struggle during coronavirus, hike prices as lab supplies from China dry up

The onslaught of the coronavirus has not only sent the global economy tumbling — but it has also hit the black market where it hurts, and Mexican cartels are no exception. The outbreak of COVID-19 has sent the price of heroin, methamphetamines, and fentanyl soaring, as the likes of the Sinaloa cartel – and its main rival, the Jalisco “New Generation” – struggle to obtain the necessary chemicals to make the synthetic drugs, which typically come from China and are now in minimal supply.“The cartels have suffered from COVID-19 due to the inability to get the regular shipments of synthetic opioids and precursor chemicals for the massive production of meth from China,” Derek Maltz, a former special agent in charge of the Drug Enforcement Administration (DEA) Special Operations Division in New York, “The cartels have continued their production at a slower rate, but the demand seems to be increasing during these times of uncertainty in America. The shutdown of cities in China and travel in and out of China have also negatively impacted the flow of chemicals and drugs to Mexico.”China, where the virus originated late last year, has, for the most part, halted production on the chemicals required for the making of the drugs as it battles the virus within its own borders and battles to make medical supplies for other crumbling countries.“Drug cartels and criminal support organizations in the industry global drug trafficking have been deeply affected by the pandemic of the COVID-19,” Johan Obdola, president of the Canada-based Global Organization for Intelligence (IOSI), concurred. “Especially when it comes to the operations of the Sinaloa Cartel, which control 90 percent of the entrance of synthetic drugs to the United States.”Obdola underscored fentanyl, which originates from China, has become the most coveted cartel commodity in recent weeks.

“In China, according to the Drug Enforcement Agency (DEA), around 5,000 illegal drug laboratories have been processing synthetic drugs and chemicals to process them. Most of these drugs have Europe and North America as the main markets,” he continued. “Cartels bring synthetic drugs through food exports, fruits, automotive equipment, toys and other products that are allocated in an extensive distribution network across the United States. COVID-19 has generated a huge loss in regarding any illegal drugs, and specifically synthetic drugs, not only to Mexican cartels but to most drug cartels operating worldwide.”In his assessment, the losses over the last two months stand at around 80 percent of their standard revenue. And the pandemic has seemingly hindered the cartels not only when it comes to getting their fix from China.

“The supply shock precisely comes from the supply chain disruption. At this moment, for the cartels, it must be hard to import cocaine from Colombia,” noted Fernando Posadas, a Latin America analyst for Medley Global Advisors. “The demand shock comes from a contraction in the U.S. economy."He continued: "Drug consumption will likely be one of the sectors hit the hardest, given that people are now prioritizing in more essential expenses such as rent and food. I would expect a contraction in drug demand of at least 10 to 15 percent this year. That could translate in an annual loss of at least $3 to 5 billion for the cartels.”But other experts beg to differ. The coronavirus crisis has also ignited steep concern that the lockdown and social distancing measures, coupled with a shuttering of support groups, social services, and medical resources, could lead to another spike in drug overdoses.