The report analyses the market situation until September 2017 

In 2017 there was an overall increase in the global production of fishmeal and fish oil. Peru and Chile benefited from the recovered biomass. Nordic countries also increased landings of small pelagics for production of fishmeal and fish oil. The first anchovy-fishing season in Peru was a success, and the second season should have started on November, but because of the high presence of juveniles, the fishing activities were banned for almost the rest of 2017. And the uncertainty in the raw material supply is driving the prices upward now.

Production

The first anchovy-fishing season in Peru started in April 2017 and reached 85 percent of the total quota, catching 2.4 million tonnes. This was seen as a positive indication of the end of the El Niño, and of a recovered anchovy biomass.

The Peruvian government set the quota for the second fishing season of 2017 in the centre-north area at 1.49 million tonnes, and exploratory fishing started on 23 November 2017. This quota was below the market expectation. Due to the high presence of juveniles, the second anchovy season was temporarily halted, initially for ten days, before more exploratory fishing to assess whether industrial activities can restart. A four-day Peruvian government research effort involving 23 vessels started on 26 December 2017 to determine if the anchovy biomass in the important centre-north zone is ready for fishing.

The decision to close the second anchovy-fishing season in Peru due to the high presence of juveniles has fostered disagreement among fishers, who questioned the unsustainable rationale behind that decision. Overall, the market seems to be concerned about the future output of fishmeal and fish oil. Some Peruvian companies have stopped pre-sales because of the unclear prospects of raw material supply.

Before the announcement of the closure on the second fishing season, the market was expecting a 1.5–2 million tonnes quota, leading to a decline in the price of fishmeal and fish oil. However, due to the current gloomy prospect for the anchovy fishing industry in Peru, the global price is now in a surging trend.

Benefiting from the first strong fishing season in 2017, Peruvian fishmeal production grew during the first three quarters of 2017, reaching 733 500 tonnes of fishmeal, 133 percent more than during the same period in 2016. Since the second fishing season will not resume until early 2018, this amount approximately represents the total Peruvian production for 2017.

Other major suppliers performed better in 2017 than in 2016 with respect to the review period, specifically Chile (+49 percent), and Denmark and Norway (+31.5 percent). Chilean production increased to 262 700 in 2017, using mostly salmon offal and anchovy as raw material. The Nordic countries were able to increase their production due to a higher supply of certain species. Sand eel harvest in Denmark grew tenfold comparing with 2016; capelin from Iceland, and herring and sand eel from Norway jointly raised the market supply, with a total production of 296 500 tonnes during the same period. This corresponds to 40 percent of the Peruvian fishmeal production.

Fish oil production in Peru doubled from 51 600 tonnes in 2016 to 103 300 in 2017 for the first nine months of the year. Chilean fish oil output also increased by 52 percent to 88 500 tonnes.

Exports

Peru is the main producer and also the main exporter of fishmeal and fish oil, by a far margin over other countries. For the first three quarters of 2017, Peru exported 953 000 tonnes of fishmeal, 72 percent more than in 2016. Nearly 80 percent of the Peruvian exports were destined for China. Viet Nam and Japan absorbed 5 percent and 4 percent, respectively.

The second largest exporter is Denmark, with most of its products shipped within Europe, to countries with marine fish farming, namely Norway (salmon), Greece, Italy and Turkey (seabass and seabream).

Peruvian exports of fish oil reached 146 300 tonnes in the first nine months of 2017, 88 percent more than in the equivalent period in 2016. Denmark and China were the main markets for these products.

Markets

China has consistently been the main consumption market for fishmeal and fish oil products, primarily for its massive aquaculture industry. China has contributed with more than 60 percent of the world’s farmed fish and seafood products in recent years.

As the price of fishmeal and fish oil in the first half of 2017 was relatively low, Chinese buyers imported large amounts of fishmeal that were stored in coastal ports of Liaoning, Shandong and Zhejiang provinces. It is reported that the peak storage quantity reached more than 200 000 tonnes in mid-2017. During the first nine months of 2017, the total amount of fishmeal imported to China reached 1.36 million tonnes, 60 percent more than in the same period in 2016, and ten times more than Norway, which is the second largest importer. Peru was the largest supplier, providing approximately 60 percent of total Chinese imports.

Since 2015, Viet Nam has been a firm supplier of the Chinese import market. In Viet Nam, the offal of pangasius fillet processing is going to fishmeal production.

Norwegian fishmeal imports increased slightly from 129 500 tonnes in 2016 to 133 700 tonnes in 2017. Salmon farming was quite stable in 2017 without negative supply shocks, which led to stable demand for fishmeal and fish oil in this market.

Price

The successful first anchovy-fishing season in Peru gave the market confidence and created relatively high expectations for the second season. The lower than anticipated quota for the second fishing season led to increasing fishmeal and fish oil prices on the world market.