Norwegian salmon producers in particular have benefitted enormously from impressive export price performance on EU markets, where the foreseeable future looks positive. Chilean farmers have not fared quite so well, and many are facing losses for the first quarter of 2013 as the improved market situation in the USA failed to compensate for weaker prices and unfavourable trade conditions in Japan. The persistent threat of disease in Chile and much higher feed costs this year present additional challenges for producers, while widespread industry consolidation continues.

Prices

The strong upward price trend that began in late 2012 continued unabated throughout the first five months of 2013, defying industry expectations and approaching record levels on EU markets in late May. For Chilean producers, low frozen coho prices in the first few months were beginning to pick up in Japan in May, and the positive trend continues in the USA.  The delayed consumer response to more expensive raw material prices, together with a rise in harvest volumes, is predicted to see prices fall back again somewhat in many markets in the second half of the year. However, with the present market balance, analysts are not predicting a major decline, and most put average 2013 NOK/kg export prices in the mid-30s.  

Supply

Norway

Although export prices for farmed salmon rose steadily throughout the first quarter and broke through the NOK 40/kg mark in April for the first time in 2 years, importers were seemingly undeterred. Norwegian salmon producers posted a record export value of NOK 8.2 billion from January to March, representing a 22% increase compared with the first quarter of 2012, even though a year-on-year reduction in total export volume of 4% to 217 000 tonnes (product weight) was recorded for the same period. The drop in supply is primarily the result of lower water temperatures in 2013 together with maximum biomass restrictions.

The biggest market for Norwegian salmon is the EU, which imported 147 422 tonnes in the first quarter at NOK 5.51 billion, increases of 3% and 32% respectively compared with 2012. Poland is now the top destination for Norwegian exports, where a growing domestic market competes with a large processing industry exporting smoked product. Norwegian exports to France, the biggest consumer market in the EU (mainly whole fresh Atlantics), were flat in terms of volume versus 2012, but higher prices saw the total value increase to NOK 1.14 billion, 27% more than last year.  Demand for Norwegian salmon is also strong on the UK market: first quarter results were 12 050 tonnes at NOK 403 million, increases of 36% and 44% respectively.  

It was mainly on the non-EU markets where the reduced supply saw export volumes drop. Exports to Asia were down by 5 520 tonnes, mainly attributable to a decline in exports to Japan, Viet Nam and Taiwan PC. Meanwhile, Norway posted lower first quarter export volumes to Russia for the first time since 2006, with 26 321 tonnes representing a 19% decrease. Total value, however, was up 11% to NOK 922 million. Like the majority of non-EU markets, firm underlying demand meant that the lower volumes were absorbed at sufficiently high prices for increased revenues. 

As the positive market performance continued into April, Norwegian exporters were again setting new records for export revenues, which totaled NOK 3 billion for the month. This is an increase of 38% over April 2012. 

Fjord trout export values also reached record levels in the first quarter of 2013, to a total of NOK 482 million, a 20% increase compared with last year. Again, it is a case of higher prices rather than greater volumes, with only a 4% rise in total export quantity to 13 000 tonnes for the first quarter. Export volumes to the two biggest markets, Russia and Japan, were down by 4% and 9% respectively. The export figures for April were 4 535 tonnes (2% down) at NOK 194 million (37% up), with an average export price of NOK 44.29 for fresh whole fjord trout, NOK 14.82 more than April 2012. 

Chile

According to SalmonEx, the price of Chilean fresh salmon sold in the USA continues to rise. So far this year, the price for the 2-3 Trim D category has risen by 45%, reaching USD 5.25 in mid-May, while in early January the price was USD 3.62. On the Brazilian market the most popular category was HG 10-12, with a price that has stabilized at USD 7.3 per kilo. As for frozen salmon exports to the Japanese market, different products are performing in different ways. While trout prices have stabilized and the product is sold at JPY 600 per kilo at present, coho salmon prices continue to recover from low levels in the first quarter, reaching JPY 550 per kilo.

During the period from January to March 2013, total exports of salmonids came to 180 400 tonnes, which means an 18% rise when compared with the same time in 2012. Average FOB prices for salmonid exports went down by 23% in relation to the same period of 2012, scoring a very low USD 4 650/tonne. 

Atlantic salmon was the most exported species throughout the first quarter with 73 480 tonnes for a total of USD 438 million, with an average FOB price of USD 5 960/tonne. In terms of quantity, a significant increase of 57% was generated. Overall an increase of 36% in total value was registered. Coho salmon was the second most important species exported, with 68 670 tonnes (5% increase in relation to 2012) traded for USD 220 million (a decline of 39%) with an average FOB price of USD 3 210/tonne. In the first quarter last year, more coho salmon was exported than Atlantic salmon. Total harvests of Atlantic salmon in the first quarter of 2013 were 52% higher than in the same period of 2012. In the case of the rainbow trout, exports during the quarter reached 38 870 tonnes, a decrease of almost 6% in comparison with 2012. In terms of value, a 31% decrease was registered, a consequence of the low international prices. 

Frozen salmon and trout were the main production lines exported in the first quarter of 2013, followed by fresh and chilled products. The cumulative exports for frozen salmon and trout between January and March were 137 100 tonnes (a 17% rise in comparison with 2012) for a total value of USD 585 million  (19% decline) with an average FOB price of USD 4 270/tonne (FOB price for 2012 was USD 6 180/tonne). Fresh and chilled salmon and trout registered exports of 39 670 tonnes for USD 245 million, with the average FOB price being USD 6 200/tonne. This production line shows a 26% increase in terms of quantity and a 19% improvement in value compared with the same period in 2012. 

Japan was the main destination during the first quarter for Chilean salmon and trout, importing approximately 77 000 tonnes for a total value of USD 297 million. USA followed with 32 000 tonnes worth USD 232 million.

Chilean salmon producers are confident that prices in the international markets will remain firm, while some sanitary problems still have to be addressed. However, according to recent reports, less than 1% of the biomass of Chilean salmon is affected by the infectious anemia virus. The president of the union, Maria Eugenia Wagner, said that the presence of the virus is normal in the aquaculture industry and that it is something that producers will have to learn to cope with. Chilean farmers are fighting the virus through the development of vaccines, drugs and management of crops, although salmon mortality remains stable at present. 

UK 

The total value of UK salmon exports in the first quarter was USD 179 million, on a par with the figures for the same period in 2012 and 2011. Volumes were down 12% to 22 175 tonnes. UK exporters are steadily shifting their focus from traditional markets in the EU and the US to East Asia, particularly China and Taiwan PC. First quarter export volumes to these two countries have tripled since 2011, up to 3 191 tonnes in 2013 at a total value of USD 23.6 million. Meanwhile exports to the EU decreased by 19% in quantity terms (18% by value) over the same period, to 8 117 tonnes worth USD 63.5 million. The UK is exploiting the competitive advantage it has over Norway, which has an uneasy trading relationship with China, and over Japanese seafood suppliers who have had to contend with health concerns related to the Fukushima nuclear disaster.

The UK domestic market is showing strong growth, and import volume in Q1 2013 was 19% higher than last year at 21 614 tonnes worth USD 168 million (34% higher). The major exporter to the UK is the Faroe Islands, with a 40% share (whole fresh Atlantics) of first quarter import volume. 

Markets 

Demand in most markets has shown considerable resilience in the face of rapidly rising prices, with the EU and the US posting increased year-on-year volumes in the first quarter. France, Germany and the UK in particular are performing well, as are key emerging markets such as Brazil and China. This is at least partly due to the similarly high prices of meat, forecast to persist in the medium term, which mean limited availability of cheaper basket alternatives for the consumer. However, the full impact of the high raw material prices that processors are paying is only just beginning to be felt at the consumer end, and demand is likely to suffer. Nevertheless, this could also be an important opportunity for Chilean producers, who are now trying to use the relatively more attractive prices of frozen, valued-added product to increase their market share in the EU. 

France 

The inflated price levels slowed salmon import growth in France, and first quarter volumes were more or less flat compared with Q1 2012 at 36 283 tonnes, with total import value up 16% to USD 272 million. Product and supplier composition have shifted somewhat, however, and imports of frozen Pacific fillets were up 12% to 5 508 tonnes, with Chile as the major supplier. Overall in Q1 2013, France imported 55% more Chilean salmon by volume, and 19% more by value, at 1 954 tonnes worth USD 13.4 million. Meanwhile imports of fresh Pacific fillets, mainly from Norway, were up 30% to 5 003 tonnes. 

Germany 

Germany imported 29 887 tonnes in the first 3 months of 2013, 4% more than last year.  Total import value was up to USD 28.2 million, an 11% increase. Imports of whole fresh Atlantics from Norway were down 6% to 9 597 tonnes, while smoked and frozen fillet imports were up 10% and 11% to 9 475 tonnes and 7 581 tonnes respectively. These figures reflect the large growth in imports from Chile, Germany’s main supplier of frozen fillets. Chilean-origin import volumes have tripled compared with Q1 2012, and, although the relative share is still small at 4.6%, it seems that Chilean producers are taking advantage of high Norwegian prices and the greater quantities they have available. Poland, Germany’s major supplier, also saw increased first quarter volumes of 8 900 tonnes (23% up) at USD 121 million (28% up), almost entirely smoked salmon. 

Japan 

In terms of volume, Japan imported 3% less salmon (85 331 tonnes) in the first 4 months of 2013 than in 2012, but the decrease in value was 36% (USD 343 million). The large drop is mainly the result of weaker early-year prices – now recovering somewhat – for frozen Pacific salmon from Chile, which is meeting with lukewarm demand this year. This is partly due to poor trade conditions, specifically a weak yen and high freight costs, as well as left over inventories from 2012. Chile still supplies the vast majority of Japan’s salmon imports, although the 2013 January to April volume of 69 502 tonnes represents an 8% drop compared with last year. Meanwhile, Norwegian-origin imports dropped by 27% to 5 373 tonnes over the same period, further evidence that overall demand in Japan is not robust enough to absorb large volumes at current prices. In response to the high prices of Norwegian and Chilean farmed, Japan imported five times more salmon from Russia, New Zealand and Canada, to a total of 7 803 tonnes. 

USA

The USA imported salmon during this period mainly from Chile with 30 269 tonnes for a total value of USD 256 million and Canada with 22 364 tonnes worth USD 142 million. Overall the market situation has improved since last year, and in the first quarter of 2013 USA imported 77 000 tonnes of salmon products, representing an increase of 14% compared with the same period in 2012. The total value of exports between January and March rose by 15% totalling over USD 578 million. 

In terms of exports, there was a 5.2% decrease in quantity and a 2% drop in the value of total exports, in comparison with the same period in 2012.

Brazil 

Brazil is one of the world’s fastest growing markets for salmon, importing almost 9 times more salmon products in 2012 (63 300 tonnes) than in 2000 (7 300 tonnes). The total value of these imports in 2012 was USD 296.5 million. Continued economic growth, only briefly slowed by the financial crisis, combined with an increasing population, has seen a rapid expansion of the target middle class demographic seeking higher quality seafood products. This trend should see sustained growth in salmon demand over the coming years, and it is Chilean producers that will be able to take advantage. Chile supplies 100% of Brazilian salmon imports, of which 78% were fresh whole Atlantics in 2012.  Frozen whole salmon made up 9% of the total volume, while frozen fillets accounted for 11%. Export prices to the Brazilian market generally follow the US market trend but are lower overall - average FOB price for fresh Atlantics in 2012 was USD 5.46 per kg. This is compensated for, to an extent, by lower transport costs and logistical conveniences resulting from the geographic proximity of the two countries.

Chilean trout competes with salmon for market share, with import volumes peaking in 2010 at 6 630 tonnes when Chilean salmon farmers were hit by the ISA outbreak. By 2012, volumes had declined to 4 270 tonnes for the year, worth approximately USD 17 million. Frozen whole trout made up 64% of these imports by volume, while frozen fillets took a 28% share.  

In the first 5 months of 2013, the Brazilian salmon market continued on its upward trajectory, importing 31 600 tonnes of salmon worth USD 170.7 million, increases of 32% and 41% respectively. Prices are also rising, recovering from significantly lower levels in 2012.  Meanwhile, trout imports fell by 35% to only 963 tonnes compared with the same 5 months last year. 

Outlook 

Although still strong in most markets, underlying demand is not expected to sustain prices at current levels once intermediaries in the value chain begin to pass costs onto the consumer. Supply is still likely to be inadequate to push prices very far down, however, particularly if wild harvests are low or disease spreads. If the supply pressure persists for too long, the high cost of salmon may result in a loss of some of the valuable ground gained last year in terms of market penetration. Chile can take advantage of the price situation, however, in order to gain a foothold in traditionally Norwegian markets, while wild salmon producers are now in a good position to expand supply to farmed-dominated markets. Meanwhile, feed prices will continue to put pressure on margins.