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GLOBEFISH - Analysis and information on world fish trade

Shrimp trade sustained reasonable growth despite the price crash in April and lower than targeted production in India during 2018

09/01/2019

Prices of vannamei shrimp declined to record lows in April 2018, recovered marginally in June and then remained stable, resulting in increased imports across the global markets. Demand grew in most of the markets during the first six months of 2018. There have been extraordinary developments in direct imports by China during this period.

Supply

Shrimp farmers in Asia slowed down production of vannamei shrimp since April, particularly in China, India and Thailand, as low prices made production unprofitable. In support, the Indian government reduced the tariff on electricity for shrimp farmers. The weaker Indian Rupee against the US dollar also lessened burdens on exporters. However, farmers’ overall income declined, forcing many to reduce production, particularly in the southern states of India where processors have had to bring raw material from as far as West Bengal.

Shrimp farmers in Thailand reduced stocking density in ponds starting in June. Some farmers shifted to black tiger farming which was less affected by the price crush and also has brisk demand from China. The share of black tiger in Thai shrimp aquaculture is relatively small at only 3–5 percent. Many farmers in Viet Nam and Indonesia also have gone into black tiger aquaculture. Their target markets are Japan and China. Compared with 2017, overall shrimp production looks steady and even increased in both these countries.In Malaysia 40–50 percent shrimp farms have switched over to black tiger shrimp that commands better sales opportunities locally and abroad.

According to the Ministry of Aquaculture and Fisheries in Ecuador, farmed shrimp production in the country increased by 24 percent to 263 600 tonnes between January and June, compared with the same period in 2017.The sea catch in Argentina has been affected by unfavourable weather and fishers’ strike. Landings declined by 15 percent to 74 000 tonnes during the first six months of 2018, compared with the same period in 2017. There has been a higher proportion of small shrimp in the catches this year.

The US domestic shrimp landings during the first half of the year have declined by 6.3 percent to 17 500 tonnes, compared with the same period in 2017. This has been the lowest catch recorded since the first half of 2013.

International Trade

There have been interesting developments in global shrimp trade during the first half of 2018 since China opened up its market with lower import tariff. Shrimp exporters worldwide now focus more on the Chinese market with encouraging results so far in 2018.

Exports

Among the top seven players, exports increased from India, Viet Nam, Ecuador, Indonesia and Argentina during the first half of 2018, compared with the same period of 2017, though growth rates in the second quarter of 2018 have been slower than in the first quarter of 2018.

India’s exports to China increased significantly during the first six months of the year (+181 percent at 13 900 tonnes) compared with the same period in 2017. However, export growth to its top two markets of the United States of America and Viet Nam slowed down from 35 percent to 14 percent and from 58 percent to 35 percent respectively, compared with the same period in 2017.

Ecuador’s exports of shrimp have shifted during the review period, as China emerged as its third largest export market, after the EU28. During this period, Viet Nam also increased shrimp exports to the EU28 by almost 50 percent, as well as to the Republic of Korea, Hong Kong SAR and Australia. Reportedly, supplies from Viet Nam to China through illegal border trade have started to diminish, while direct exports increased.

Indonesian exports of shrimp grew by 14 percent during the first six months of the year, due to the 124 percent and 75 percent export rises to China and Malaysia, respectively. Exports also increased to the top three markets of the United States of America (+14 percent), Japan (+3 percent) and the EU28 (+11 percent), but declined by 53 percent to Viet Nam as a result of increased direct exports to China.

China’s exports decreased during this period due to the lower aquaculture production and rising domestic demand of shrimp. Thai shrimp exports also suffered due to raw material shortage from domestic production, while the import ban on farmed shrimp continues since 2017 to protect local farmers. 

Imports

During the first half of the year there have been significant changes in Asian shrimp imports. Direct imports of shrimp to China increased by a hefty 93 percent from global sources during this period, supported by the 2 percent import tariff and strict measures against illegal imports from Viet Nam. Subsequently shrimp imports in Viet Nam slowed down with decreased supplies from Ecuador, Indonesia, Thailand and Argentina.

Imports into the EU28 also increased during the review period, as a result of record low shrimp prices ahead of the summer consumption season.

United States of America

The US economy and stock market posted positive trends between January and September, with good disposable income that has boosted overall shrimp consumption in the market. Vannamei has been the cheaper and dominant species and summer demand was good.

Amidst the well-supplied market, shrimp imports registered its first year-on-year decline in May after 14 months of continuous growth. During the first six months of the year, imports increased by 5.7 percent, a rate lower than the growth rate during the same period in 2017. The affected product group was raw shell-on shrimp (-3 percent). Imports of raw peeled shrimp increased by 11 percent and of prepared shrimp were up by 10 percent during the first half of the year, compared with the same period in 2017.

Japan

Shrimp demand in Japan is seasonal. Despite the falling market prices, consumer demand failed to improve in 2018.The earthquake in Hokkaido and strong typhoon in Osaka overshadowed the summer holiday seasons in July and August. Osaka is well known as a good market for black tiger and wild caught shrimp, for which there seemed to be supply shortage this year due to strong demand from China. Elsewhere in Japan, shrimp consumption was reasonably good during O-bon holidays in July and August.

Imports during the review period declined by 4.4 percent to 95 300 tonnes, compared with the same period in 2017. Among the top three suppliers, imports fell from Viet Nam (-9 percent at 23 200 tonnes) and Thailand (-6 percent at 17 300 tonnes), but increased from Indonesia (+6.5 percent) and marginally from India (+1 percent at 10 200 tonnes).

European Union (Member Organization)

Supported by a stable economy and lower shrimp prices, overall imports improved in the EU28 during the first half of 2018. Among the top seven suppliers (Ecuador, Viet Nam, India, Greenland, Argentina, Canada and China), cumulative imports increased from all except from India. The decrease from India was due to a more than 50 percent cargo detention for compulsory inspection of Indian shrimp due to an antibiotic alert.

Ecuador continues to benefit from its ‘zero tariff’ status and imports increased by 8.5 percent during the first half of the year, mostly consisting in raw shell-on and peeled shrimp. EU28 imports from Viet Nam also increased (+46 percent), mainly comprising value-added shrimp.

In early September, a tax was put on Argentine exports to the EU28, which will contribute to a further price rise of Argentine shrimp in the EU28.

Asia/Pacific and other markets

Shrimp demand remained reasonably good in East Asian markets, supported by the low prices. Domestic consumption has been strong in most of the regional markets.

While China remained the market focus for shrimp exporters worldwide, imports also increased in the Republic of Korea, Hong Kong SAR, Taiwan Province of China and Malaysia, for domestic consumption. Viet Nam continued imports for reprocessing and re-exports but at a slower pace compared with 2017, due to the tightening of illegal border trade with China. While Vietnamese imports from its top supplier Ecuador fell by 3 percent to 102 000 tonnes during the first half of 2018, strong supplies persisted from India, Iran and Argentina during this period, making total imports by Viet Nam higher by almost 10 percent (220 000 tonnes).

During the first six months of 2018, direct imports of shrimp to China increased by 92 percent to 113 000 tonnes, with increased supplies from Ecuador (+341 percent at 41 400 tonnes), India (+183 percent at 13 900 tonnes), Thailand (+28 percent at 8 300 tonnes), Indonesia (+125 percent at 3 100 tonnes) and Argentina (+99 percent at 17 100 tonnes). Total imports during this period were estimated to be 6.5 percent lower because of the strong crackdown on illegal supplies from Viet Nam.

The popularity of Argentinean shrimp has increased significantly in China. According to INFOFISH, local sales of jumbo size Argentine red shrimp shot up by 20 percent during the first half of 2018, marketed through 3 000 supermarkets. The trade war between the United States of America and China resulted in a 25 percent import duty on US seafood including shrimp, effective since June 2018.

The trade war between the United States of America and China resulted in a 25 percent import duty on US seafood including shrimp, effective since June 2018.

Price trends

Vannamei shrimp prices declined to record low levels in April, but stabilized at higher values in June. The trend remained stable during the peak harvesting period between July and September. In comparison, black tiger shrimp prices remained firm as a result of increased demand from China and Japan, but also due to a shortage in supply.

Meanwhile prices of all types of sea-caught shrimp, both tropical and cold water, remained firm and even increased due to the strong demand from China. Prices of Argentine shrimp, particularly large sizes, increased lately as a result of a 15 percent reduction in catches.

Outlook

The main farming season ended in Asia at the end of October and raw material prices are showing upward trends. According to the Global Aquaculture Alliance (GOAL) forecast, the 2018 output for Ecuador, Indonesia and Vietnam may reach nearly 500 000, 550 000, and 600 000 tonnes, respectively, while Indian production may fall below 600 000 tonnes. Thai production is likely to be below 300 000 tonnes. To ease the raw material shortage, Thai exporters continue to lobby for lifting the import ban on farmed shrimp.

In the market place, the US stock exchange and economy show positive signs reflecting high consumer confidence and good disposal income, indicative of a positive consumption trend for shrimp throughout Christmas and New Year. This in turn will stimulate inventories’ movement in the wholesale trade. The trend is expected to be similar in Europe, as consumers will have access to cheaper tropical shrimp in 2018.

In Japan, the typhoon damages are gradually diminishing, and shrimp consumption is expected to improve starting in the autumn and peak between mid-December and New Year. Demand for processed shrimp in particular will be higher at supermarkets, convenience stores, family restaurants and lunch box manufacturers.

In China, the positive trend in direct imports of shrimp is likely to continue and illegal imports from Viet Nam will slow down further. In East Asian markets including China, prices of black tiger shrimp and all types of sea-caught shrimp will also increase from now until the Lunar New Year celebration in early February of 2019.

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