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GLOBEFISH - Information and Analysis on World Fish Trade

Alaska pollock and cod prices on the way up

14/01/2019

Lower quotas and some unexpected shifts in trade patterns are pushing prices up. The trade war between the United States of America and China is affecting trade and prices, but at least in the short term, it is to the disadvantage of the United States of America. Surimi sales in Asia are increasing, US demand is good, while surimi sales in Europe are stagnating. Prices are on the way up.

Resources

During the summer, ICES recommended a 47 percent cut in the North Sea cod quota, from 53 058 tonnes in 2018 to 28 204 tonnes in 2019. The North Sea cod stocks have not yet fully recovered after the historic low point in 2006, although there has been a slight improvement. One of the difficulties in this recovery is the use of non-selective fishing methods like bottom trawl in some North Sea fisheries, such as the plaice and sole fisheries, which scoop up everything including undersized cod, resulting in a large by-catch of young cod.

The cod fishery in the North Atlantic coast of the United States of America is not doing well again. Cod landings in Maine were at a record low of 36 tonnes in 2017, compared to 9 500 tonnes in 1991. Other New England states fared no better. The US Atlantic cod fishery has all but disappeared. In 1980, a total of 53 600 tonnes of Atlantic cod were landed in the United States of America. In 2016, this total dropped to just 1 500 tonnes.

Landings of Pacific cod have grown remarkably. In 1980, total US landings of Pacific cod amounted to 8 900 tonnes, while in 2016 this total reached 321 400 tonnes. The Groundfish Forum estimates that landings will decline marginally from 385 000 tonnes in 2018 to 367 000 tonnes in 2019.

Surimi

The European market for surimi has stagnated recently, especially in France; surimi sales are declining and raw material prices have been rising. The US surimi industry is facing the same problems as Europe when it comes to raw material prices, as the cost of Alaska pollock and Pacific whiting have risen. There is a high global demand for these species, and that has been pushing prices up. The Alaska pollock industry in the Russian Federation is now shifting to fillet production, leaving less raw material for surimi production.

US demand for surimi is generally good during the summer months. Surimi is often used in salads and picnic baskets during the summer, and the higher prices do not seem to have discouraged consumers. Every year about 90 000–100 000 tonnes of surimi are sold in the United States of America, where there has also been some product development, such as shredded surimi with mayonnaise or surimi flakes.

Demand for surimi in Asia is growing noticeably. The Asian surimi sector uses other species as raw material, such as itoyori, flying fish, sea bream and ribbonfish, supplied mainly from China, India, Indonesia, Malaysia, Thailand and Viet Nam. Product innovation there is high and surimi makers offer a diversity of products, such as fish balls, fish cakes, dried surimi products and flavoured products. Surimi prices on the Asian market have been rising due to this increasing demand. 

Trade

The trade war between the United States of America and China is escalating. In July, Chinese seafood products entering US borders were hit by a 10 percent tariff, including Pacific cod, Alaska pollock, shrimp, salmon and tilapia.

In September, US President Trump announced that 10 percent tariffs would be imposed on Chinese goods worth about USD 200 billion. Fillets of cod and Alaska pollock were taken off the list of products subject to these duties, but Trump also announced that tariffs would be increased to 25 percent, effective 1 January 2019.China retaliated immediately, imposing new tariffs of 10 percent on imports of US goods worth USD 60 billion. Seafood was not much affected by these counter-measures, since only smoked Pacific salmon and fishmeal/pellets were included in China’s list.

US exports of Alaska pollock went up by volume as well as value during the first six months of 2018. Total Alaska pollock exports (including surimi) amounted to 244 000 tonnes worth USD 671.8 million, representing a volume increase of 9.5 percent and a value increase of 12.9 percent.Exports of Alaska pollock fillets from the Russian Federation more than tripled to 31 300 tonnes during the first half of 2018. This growth resulted from an increase in value-added products and increases in fillet prices. Exports of frozen Alaska pollock fell by 7 percent to 437 600 tonnes and cod exports fell to 53 400 tonnes (-5.4 percent). Exports of cod fillets fell by 44.3 percent to 9 300 tonnes. Exports of haddock fillets were stable at 2 300 tonnes. Exports of minced products including surimi doubled to 6 700 tonnes.

Norway registered a decline in export volumes of fresh and frozen cod during the first half of the year, but the value of cod exports increased. Total exports of fresh cod decreased to 53 000 tonnes at a fob value of NOK 1.9 billion, representing a 5 percent decline in volume and a 3 percent increase in value. Exports of frozen cod also decreased to 43 000 tonnes at a fob value of NOK 1.6 billion, down by 5 percent in volume and up 5 percent in value. Exports of traditional whitefish products, like klipfish, salted fish and stockfish, were up by volume and value during the first half of 2018. For klipfish, Portugal and Brazil are the most important markets, while the main outlets for salted fish are Portugal and Italy. For stockfish, the major markets are Nigeria and Italy.

UK retailers are experiencing rising sales of Alaska pollock products. During a 12-month period ending in early August 2018, retail Alaska pollock sales increased by 10.6 percent to GBP 115.4 million (USD 149.2 million). Prices were up compared to earlier, so the volume only increased by 6 percent over the same period. The most popular product form is Alaska pollock fish fingers, which grew by 7.5 percent to GBP 56.2 million. The product that increased the most was chilled Alaska pollock meals, up by 73 percent to GBP 835 000. 

Prices

Wholesale Alaska pollock prices in the Russian Federation have risen by 24 percent in Russia’s Far East and by 25 percent in Central Russia. There is an increased demand for Alaska pollock products in China, and to a lesser degree, in the EU28. 

Outlook

It is expected that Russian Federation exports of Alaska pollock fillets will continue to grow during the second half of 2018. Landings of Alaska pollock from the Sea of Okhotsk are expected to reach about 140 000 tonnes in November and December. Alaska pollock prices are set to increase everywhere, partly as a result of the trade war. Russian Federation Alaska pollock prices will also remain firm or edge further upwards. The international demand for Alaska pollock is good, the Russian Federation ruble is weak against both the Euro and the US dollar, and Alaska pollock fishing in the Bering Sea has been poor lately, putting pressure on supplies and prices. There is a growing demand on the domestic market, which also contributes to price pressure. As the B season is well underway, observers now believe that Alaska pollock prices will climb from the relatively low levels of the previous five years. It seems that the times of cheap Alaska pollock are over.

Cod prices are also expected to go up. There will be quota cuts for next year in the North Atlantic and the Barents Sea, and the cod-fishery on North America’s Atlantic coast is very poor and not improving. The trade war between the United States of America and China will trigger some changes in the structure of international seafood trade. The Russian Federation is expected to supply China with more product, as is Norway, and US exporters may turn to other countries, such as Cambodia, Thailand and Viet Nam, to process their raw materials.

Trump’s Trade War could backfire, according to Alaska’s At-Sea Processors Association (APA). It could end up favouring Russian Federation (and Chinese) exporters at the expense of Alaska processors. Because Alaska exporters will face high tariff on their exports to China, Russian Alaska pollock exporters can send their Alaska pollock for processing in China, because fillets of cod and Alaska pollock were removed from the original US list of products subject to the penalty tariffs. Chinese processed Alaska pollock fillets with Russian Federation origin can be exported to the United States of America with tarifffree access. Not only Russian Federation suppliers could do this, other large suppliers of whitefish, as for example Norway, could do the same. Thus, Alaskan processors could end up with a competitive disadvantage due to Trump’s Trade War.

Alaska’s fish exporters to Latin America are ready to break new ground. Current exports to Brazil are about 2 000 tonnes per year, but the Alaska Seafood Marketing Institute (ASMI) hopes to double this within five years. The expansion plans are mainly targeting Alaska pollock and salmon. Brazil is a very important market for Portuguese and Norwegian salted and dried cod (klipfish), and the Alaskans want to enter this market through cooperation with Portuguese processors. The European surimi market has come to a standstill. In fact it has been declining for the past seven years, while demand in Asia is growing, and Asian producers are introducing new products based on surimi from local species. Tropical surimi in Europe is declining. Surimi consumption in the United States of America is high, and will probably continue to grow, especially as new products are being introduced. But consumer surimi prices will continue to rise, partly due to higher raw material prices, and partly because of growing demand and limited supplies.

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