GLOBEFISH - Information et Analyse sur le Commerce Mondial du Poisson

Fishmeal trade is back on track

07/01/2021

The first anchovy fishing season in the north-central area in Peru concluded on 15 August with a total authorized quota of 2.41 million tonnes. The quota was fully taken despite mixed difficulties due to the pandemic during fishing operations. Since early 2020, prices have been gaining further upward momentum mainly due to the pandemic. However, the bump harvest from Peru has started to exert downward pressure on prices.

Production

In September 2020, Peru’s Ministry of Production began scientific research on the biomass along the Peruvian coast. In the meantime, the government had announced the Total Allowable Catch (TAC) quota for the first fishing season in the southern area at 435 000 tonnes which officially started on 1 August and will run until December 2020.

For the first 8 months of 2020, a total of 2.37 million tonnes of raw material for fishmeal production was landed in ports along the Peruvian coast, revealing a 2 percent decrease in comparison to the same period of 2019. Consequently, the shrinkage of raw materials has translated into an almost identical drop in fishmeal output in Peru, registering 557 411 tonnes from January to August 2020. Similarly, fishmeal production in Chile was hovering at around 265 000 tonnes during the review period, slightly lower than the same period in 2019.

Cumulative production of fishmeal in Northern Europe increased during January - August 2020 by around 12 percent, while fish oil was up by 26 percent. During January to August 2020, fish oil production from Peru and Chile amounted to 80 408 and 97 640 tonnes respectively.

Exports

Peruvian fishmeal exports tumbled to merely 265 841 tonnes in the first half of 2020, a drop of 58 percent compared to the same period of 2019. The plunge is largely due to the pandemic’s impact on many countries, and in particular the main markets in Asia have exerted stricter border controls as precautionary measures. In addition, the bleak performance of the second fishing season of 2019 saw a significant reduction in raw material landings which translated into a shortage in early 2020.

In terms of fish oil, Peruvian exports decreased by 51 percent from 95 910 tonnes in 2019 to 46 848 tonnes in the first half of 2020. Traditionally, Denmark is the main destination market for Peruvian fish oil, however, during the reporting period, Belgium took over Demark to become the largest importer.

Markets

China, the largest consumption market for fishmeal, has seen a drop of imports by 27.6 percent from 779 597 tonnes in the first half of 2019 to 564 368 tonnes in the same period of 2020, mainly as a result of contracted sourcing from Peru coupled with seasonal low demand on feed inputs. In general, the reported linkage between frozen seafood and COVID-19 has made Chinese authorities more cautious in the control and inspections of imported products.

In addition, there were nearly no fishing activities along the Chinese sea from May to September 2020 due to the moratorium, which has led to lower domestic raw material supply to fishmeal plants. Another fact worth mentioning is that China has implemented tariff exemption for fishmeal imported from the United States of America. In addition, the Gulf menhaden sector is playing an increasing role in supply the world with high quality feed.  In terms of fish oil, Norway remained the biggest importer, registering 81 844 tonnes from January to June 2020, a decrease of 14 percent compared to the same period of 2019.

Prices

Starting from early 2020, prices have been gaining a further upward momentum. On the one hand, the pandemic has been impeding the economic performance in many countries, however, recovering demand in China and other economies keep absorbing the products. Since the start of the first fishing season in Peru, the bump harvest started to soften the hiking trend slightly.

Outlook

This year, the cumulative production of fishmeal and fish oil has remained slightly down with respect to 2019. However, the production achieved so far is considered to be a big success considering the pandemic resulting in a global economic downturn. Currently, there is no negative news concerning the upcoming second fishing season in Peru, which also suggests increased confidence for the sector. Peru has exported less fishmeal to China due to the impact of the pandemic. It is foreseeable that more Peruvian shipments will arrive at Chinese ports along with resumed economic activities worldwide.

It is expected that the negative impact of COVID-19 on the trade of fishmeal and fish oil will decrease. Firstly, the government and relevant competent authorities have had sufficient time and more experience to deal with the pandemic, and to formalize adaption plans. Secondly, on the demand front, China, which usually absorbs 80 percent of the Peruvian production of fishmeal, seems to have recovered quickly from the pandemic as aquaculture and terrestrial farming activities have begun to normalize.

Prices of fishmeal and fish oil have hovered at a high level for several months already in 2020. In the short term, prices are expected to subside a bit with the ample supply from Peru. However, the evolution of the pandemic will probably be a decisive factor in determining if global economic activity will ever return to normal.

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