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GLOBEFISH - Información e Análisis Comercial en Pesquerias

Small Pelagics - September 2014

01/09/2014

Supplies of mackerel are abundant, pushing prices down a bit. Supplies of herring, anchovies and sardines are tighter and expected to decline.

Consequently, mackerel prices are predicted to stagnate and decline, while herring, anchovy and sardine prices may rise moderately.

News

Norwegian exports of pelagic fish increased slightly during the first half of 2014, reaching a value of NOK 2.6 billion (USD 423 million).

Exports of herring actually fell by 10% to NOK 1.3 billion (USD 211 million), while exports of mackerel increased by 41% to NOK 900 million (USD 146 million).

Ukraine has long been an important market for Norwegian pelagic fish and with the present unrest in Ukraine, Norwegian exports to the country have been affected negatively. During the first half of 2014, total Norwegian exports to Ukraine were down by 38%, mainly as a result of the unrest and a tighter credit situation faced by importers.

Researchers are seeing a weakening of this year’s El Niño already, and expect that water temperatures will return to normal in the second half of the year. Though landings were down during the first half of 2014 as a result of El Niño, the outlook for fishing off the coast of Peru and Chile is now a bit more optimistic.

Mackerel

Supplies

In 2013 there were large amounts of mackerel in the sea and along the coast of Norway, to the great delight of fishermen. However, other species may have suffered because of all the mackerel. According to researchers at the Institute of Marine Research in Bergen, Norway, it is know that mackerel feeds on juveniles of a number of other species, such as herring, saithe, sprat, and sandeel. Thus, the abundance of mackerel may have decimated new generations of these species, although it is still too early to tell.

In April, Iceland once again set a unilateral mackerel quota for 2014 at 147 547 tonnes, which means that Iceland must cut their catch by about 10 000 tonnes compared with last year. In a statement from the Icelandic Government, this quota was noted as “restrained and responsible”. “Our 2014 mackerel quota supports Iceland’s efforts to preserve the mackerel stock, which should be the long term management goal,” said Iceland’s Minister of Fisheries and Agriculture, Sigurdur Ingi Johannesson, in a comment.

The Department of Fisheries, Hunting and Agriculture of Greenland set its quota for mackerel at 100 000 tonnes for the 2014 season. Of this, 52% is allocated to domestic vessels, as the Department wishes to give priority to the domestic industry.

Horse mackerel is a major species harvested by South African and Namibian fleets. Now China is getting into this fisheries as well, though in an indirect way. China Fishery Group, part of Pacific Andes International, has sold a large freezer-trawler to a Namibian joint venture company, in which China Fishery Group is a part owner. The vessel, which is 120 meters in length, will be the largest ever Namibian-owned fishing vessel. The vessel will be stationed in Walvis Bay and will be fishing for horse mackerel. In a comment, Namibian Minister of Fisheries and Marine Resource, Bernard Esau, said: “This is the kind of investment in future growth that the Government of Namibia is keen to see”.

Exports and imports

During the first quarter of 2014, Norwegian mackerel exports increased noticeably. Exports of frozen whole mackerel increased by 12% by volume, to 52 400 tonnes at an FOB value of NOK 622 million (USD 101 million). China was the main importer, strengthening its position as the number one importer of frozen Norwegian mackerel as they accounted for almost 23% of Norwegian frozen mackerel exports (by volume). Average export prices were up by 23% during the first quarter, which explains why the export value increased as much as it did.

It is worth noting that Nigeria has returned as a major buyer of Norwegian mackerel this year. While Nigeria imported only 600 tonnes of Norwegian mackerel during the first quarter of 2013, in 2014 this had increased more than twelvefold, to 7 500 tonnes. However, Nigeria is taking the lower quality mackerel, and the average price of frozen mackerel exported from Norway to Nigeria was only NOK 8.83 per kg, compared to NOK 12.25 per kg for mackerel exported to the EU. In the second quarter of 2014, exports to Nigeria rose even more, and the country became the second largest market for frozen Norwegian mackerel after China. While most of the mackerel exported to Nigeria is consumed domestically, most of the mackerel exported to China is further processed there before being shipped to Japan.

Despite this recent growth for Nigeria, there is great uncertainty about this market. The Nigerian Government announced this year that it will cut fish imports by 25% in 2014, by 50% in 2015 and by 75% in 2016. It is highly unlikely that domestic production can replace imports, at least in the short term, which annually amounts to about 780 000 tonnes. The Government may face a difficult situation if it actually cuts imports by as much as it says it will. The effect could be a severe weakening of traditional and well-established distribution systems for fish and fishery products leading to shortages and a drop in fish consumption.

Germany is an important European market for mackerel, but during the first quarter of 2014, imports fell compared with the same time period in 2013. Total imports of frozen mackerel amounted to 6 100 tonnes, compared to 7 900 tonnes during the same period last year (-22.8%). The main suppliers, the UK and Ireland, both saw declines in shipments, while Poland and Norway doubled their exports to Germany, albeit from a very low base.

Prices

Frozen mackerel prices have been on an upward curve since mid-2012, although there have certainly been ups and downs. A new peak was reached in April 2014, but this was followed by a sharp drop in June. In view of the expected availability of mackerel in the months to come, prices will probably not come back up for some time.

Herring

Supplies

In May, ICES issued revised advice for mackerel catches in the North East Atlantic, increasing the recommended limit from 890 000 tonnes to 1 011 000 tonnes. This is still lower than the TAC of 1.24 million tonnes that the EU, the Faroe Islands and Norway agreed upon in March. The EU commented that it has no plans to adjust the mackerel quota further.

Although the “Herring War” has been going on for some time now, it now seems that it has come to a conclusion, for the time being at least. In June, the European Commission announced that it has lifted its sanctions on imports from the Faroe Islands. As part of the agreement, the Faroe Islands have agreed to stop their proceedings against the sanctions in the World Trade Organization WTO.

In Alaska, the Togiak herring biomass has fallen by 7%, to about 157 448 tonnes. Consequently, this year’s herring season, which started in May, will yield lower landings. The on-shore processors have reduced their production capacity accordingly. It is also said that there is an oversupply in the herring market that depresses prices on that side of the continent. The first week of fishing was a disappointment, as no herring schools were spotted.

Exports and imports

Norwegian herring exports during the first half of 2014 fell in volume due to poorer landings. Just during the first quarter of 2014, exports fell by 12.3%, to 51 500 tonnes. This trend continued through the second quarter, as exports registered a decline of 5.8% compared with the first half of 2013. In terms of value, there was a 13.7% decline during the first quarter demonstrating a slight price decrease compared with last year. During the first half of the year, prices fell by 6.7% compared with the first half of 2013.

The Russian Federation was the main market for Norwegian frozen herring both in 2013 and in 2014. However, during the first quarter of 2013, exports to The Russian Federation declined by 11% in volume, but only by 8.7% in value, indicating a slight price increase on the Russian market. In total, Norwegian export prices fell by 1.6% during the first quarter of 2014.

Exports of Norwegian frozen herring to Lithuania almost doubled during the first quarter, while there was a 21.5% decline in exports to the Ukraine. Exports to Egypt fell dramatically during the first quarter, by almost 77%.

Dutch exports of frozen herring also declined slightly, from 43 900 tonnes in the first quarter of 2013 to 41 100 tonnes in the same period in 2014 (-6.4%). It seems that Egypt has shifted to the Netherlands as its main supplier, and exports from the Netherlands to Egypt rose by 11%, making Egypt the most important market for Dutch frozen herring. Exports to Nigeria dropped markedly (-40%), while there were some increases in shipments to European countries.

Frozen herring fillets is a popular product in Germany, and the country imported 7 300 tonnes of this during the first quarter, just slightly less than in the same period in 2013. Norway is the main supplier by far, accounting for 55% of imports.

Imports of fresh and frozen herring into Japan were fairly stable during the first quarter of the year. There was a very slight increase in volume, but very little movement among the relative positions of the suppliers.

On the Polish market, one of the major markets for herring in Europe, sales have been dropping. During the first quarter of 2014, sales dropped by 7%, and this is worrying the industry. The main competitor to herring, it seems, is chicken. In response, the industry is now changing the image of herring, from an old-fashioned food item sold mainly in family-size jars and eaten mainly at Christmas and Easter, into a “hot, attractive” product that can compete with salmon and chicken.

Prices

Herring prices follow certain patterns. While whole frozen herring usually have a price peak in June every year, frozen fillets follow a more even pattern throughout the year. Since the beginning of 2012, prices for frozen fillets have been on a downward trend, but they seem to have stabilized over the past couple of months. At least, they have not fallen further, although they are at their lowest level since July 2011. Pricess for whole frozen herring have followed the expected pattern this year, although one may register a slight downward trend, as the peak in June 2014 was below the peaks in June 2013 and June 2012.

Over the next few months, it is expected that prices will edge lower, but not by much. Supplies are expected to be a little tighter, so this may help prevent any dramatic declines.

In the face of market uncertainty, the Norwegian fishermen and processors agreed on cutting the minimum price for North Sea herring as of July 1 by NOK 1.00 (USD 0.15). The major markets, The Russian Federation and Ukraine, are facing great uncertainty because of the on-going political and military conflict. In addition, tougher import restrictions in Nigeria has led to difficulties on that market, too.

Anchovies and sardines

The Pacific Fisheries Management Council (PFMC) of the USA in April set the quota for the West Coast sardine fishery for 2014/15 at only 65% of the previous year. This decision was made because there are signs of a dwindling stock.

Peru’s catches of anchovy have been slow this year, and fishermen do not expect that the 2.53 million tonne quota will be filled. El Niño usually gets the blame for poor landings, but this year El Niño off the coast of Peru lost its strength in June. In May and June, temperatures were abnormal, and this must have affected the fishing. In addition, the Ministry of Production in July decided to suspend anchovy fishing in a number of areas for five days due to the high concentration of juveniles in the catches. This also contributed to lower landings of anchovies in Peru.

On the eastern side of the Atlantic, researchers have registered an increase in the anchovy biomass. Undercurrent News reports that Azti Technicalia, a Basque Country-based marine research center, reported that the anchovy biomass in the Bay of Biscay has risen by 58%. However, researchers also warned against increasing the fishing quotas too rapidly.

Chile’s pelagic landings rose by almost 28% during the first three months of 2014, to 522 600 tonnes. Sardine catches were particularly good, and more than doubled compared with the same period in 2013. By the end of the first quarter, 53% of the quota for sardines had already been caught. However, the quota for 2014 was cut dramatically by 38.3% to 373 000, so during the next nine months, only 176 000 tonnes can be landed. Thus, there could be a rather tight supply situation for sardines in South America.

Brazil has decided to extend the import tax reductions on frozen sardines for another five months from May. The import tax was reduced from 10% to 2%, and will now be in effect until 30 September. The main objective of this import tax reduction is to ensure the supply of frozen sardines on the domestic market.

Supplies of sardines on the Japanese market declined early this year, and in June, supplies were about 60% lower than normal. Consequently, prices rose, and according to reports on SeafoodSource.com, sardine wholesale prices in Japan rose by 30 to 50%.

Canned sardines

Over the past 15 months, imports of canned sardines into the European market have been flat or slightly declining. The trend from 2013 seems to continue into 2014, as there were slight reductions in first quarter imports into Germany (-5.3%), France (-26%), and the UK (-8.6%). Morocco was the main supplier of canned sardines to all major markets. For all small pelagic fish, landings in Morocco reached more than MAD 726 million in April 2014 compared with MAD 684 million a year earlier. The National Office for Fisheries reported an increase of 6% in value and 7% in volume in its latest statistics. First-hand prices of sardines ranged from MAD 1–3.5.

In the USA on the other hand, there was a 6.3% increase in canned sardine imports during the first quarter of the year. However, the USA registered a 13% decline in imports in 2013, so it is not yet back to the 2012 level. Ecuador and Canada are the main suppliers.

Outlook

The outlook for the small pelagics industry is mixed. Supplies of mackerel will be good, while supplies of herring will be tighter. Herring prices are expected to remain relatively flat, perhaps with a very slight decline, while mackerel prices might slide a bit further. For anchovies and sardines, it is expected that there will be noticeable reductions in supplies, and as a consequence prices for these species may rise.

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