So far this year, the Barents Sea and Lofoten cod fisheries have been very good, but prices have been low.

The skrei fishery in Norway was especially productive in the spring, reflected by record Norwegian cod exports during the first half of the year. On the surimi market, a shortfall in global supplies is foreseen, and consequently higher prices may be expected.

Cod

Supplies

The Barents Sea cod stocks are generally seen as well managed by the joint Russian-Norwegian Fisheries Commission. After a period of lower production, the cod stocks have been brought up again and are now considered in good shape. However, the International Council for the Exploration of the Sea (ICES) has recommended a 10% cut in the quota, recommending a quota of 894 000 tonnes for 2015. Observers in Norway were surprised at this, and now expect that prices may be driven up as a result. At the same time, ICES is recommending a 10% increase in the haddock quota. This is also a bit surprising, as the Norwegian Director of Fisheries has proposed a cease on all haddock fishing for the rest of 2014 as a provisional measure to stop the decline in the haddock stocks.

Relative to the Barents Sea cod stocks, the Baltic cod is not doing so well. Based on scientific advice, ICES has recommended a significant cut in the quota for 2015. The quota cuts suggested are 53–56% below last year’s quota.

Exports

The Norwegian Seafood Council reports that groundfish exports during the first half of 2014 set new records. Total exports amounted to NOK 5.82 billion (USD 946 million), which was a 20% increase over the same period in 2013. The main reason for this increase was the very productive fishery during the first half of the year. Prices, on the other hand, were low, although they have been rising in July.

All sectors of the Norwegian groundfish industry have shown an increase in export values. The export value of fresh fish rose by 29%, frozen products by 14%, stockfish by 16%, salted fish by 25%, and klippfish by 6%. However, in some cases the export volumes declined slightly. In particular, exports of skrei were up significantly, reaching NOK 794 million (USD 130 million), an increase of 62% compared to the first half of 2013. Skrei is the spawn-ready spring cod coming into the Lofoten and Vesterålen areas of northern Norway every year. About 40% of the spring-spawning cod spawn in this area.

Imports

US imports of groundfish increased by just 2.8% in 2013 compared with 2012. During the first quarter of 2014, imports slowed, and were just slightly less than during the same period in 2013, at 42 500 tonnes. Both fillet imports and block/slabs imports are very stable. There was also very little movement in the relative positions of the major suppliers. China remains by far the most important supplier, accounting for about 75% of total US imports of cod-like groundfish during the first quarter of the year.

German imports of frozen cod fillets were also remarkably stable during the first quarter, at 6 400 tonnes, compared with 6 500 tonnes in the same period in 2013. The UK registered a slight decline in imports, as the volume slid from 24 200 tonnes in the first quarter 2013 to 23 800 tonnes in the same period in 2014. On the German market, there was little movement in the relative positions of the suppliers, while in the UK, China, Iceland and Norway gained market share, while Denmark and the Faeroe Islands lost some ground.

Prices

In general, cod prices continued to strengthen during the first quarter of 2014, and this trend persisted into the second quarter. Demand on the European market, which is the price leader for Atlantic cod, is strong and getting better as the economies recover. In spite of large amounts of cod available from Norway around Easter, prices held firm. Norwegian processing companies were buying a significant amount of cod for salting, and this also helped push prices upwards. Another reason why prices have risen is the fact that EU vessels have not been able to fish in the Barents Sea at the beginning of the year. Thus, Norway and the Russian Federation have controlled the fishery completely, and the total volume entering the market has been lower than usual. This will, however, change later in the year, when the EU vessels are back in action.

Reports from North America indicate that this market is stable, and that prices are also firming up there.

Haddock prices, which have been very high, are staying firm. Supplies of haddock are limited, and there is not much change in the situation.

Alaska pollock

Supplies

The stocks of pollock have been in decline for some years in the Russian Federation. Based on scientific advice, the TAC in the Far East waters of the Russian Federation was reduced from 1 million tonnes in 2011 to 885 000 tonnes in 2014. The Russian Federation went through a similar decline a decade ago, when the TAC was reduced from 810 000 tonnes in 2001 to only 415 000 tonnes in 2004. Russian scientists in the Kamchatka-based Research Institute of Fisheries and Oceanography (KamchatNIRO) now insist that there is no evidence to support an increase in the TAC. Consequently, they are in disagreement with the all-Russian fishery institute VNIRO, which recommends an increase of the TAC to 965 000 tonnes for 2015.

Pollock roe yields have been strong this year so far, indeed almost double that of last year’s yield, causing supplies of roe to be significantly up. However, as last year demonstrated exceptionally low roe supplies, some are claiming that levels are now only back to normal. Consequently, pollock roe prices have come down, although not as much as could be expected.

Imports

In 2013, there was a significant reduction in German imports of frozen Alaska pollock fillets, which fell by 12.7%. There are signs that this may change in 2014. During the first three months of the year, imports of frozen fillets were up by 7.9%. The increase was mainly from the Russian Federation and the USA, while imports from China were a bit lower compared with the same period last year. Imports of frozen Alaska pollock fillets into France fell slightly (-11%). Again, there were reduced shipments from China and slight increases in shipments from the Russian Federation and the USA.

Hake

Supplies

In April, Peruvian authorities authorized an extra 5 000 tonnes of hake to be caught in the very north of the country. The maximum TAC for hake was set at 47 129 tonnes, up 21% compared to the 2013 quota. However, the industry wanted even more of an increase; they had requested a total quota of 70 000 tonnes, an 80% increase on last year’s quota.

Apparently, IUU fishing is a significant problem in the Chilean hake industry. Undercurrent News reports that illegal, unregistered or unreported catch of hake in Chilean waters may constitute as much as over 80% of the TAC. Consequently, the sustainability of hake in Chile is at risk.

Imports

The European demand for hake is strengthening, as a result of improved economic conditions, especially in southern Europe. Supplies from South Africa and Namibia are limited, as exporters claim that demand is greater than supplies at the moment. In Germany, however, hake meets strong competition from Alaska pollock, which is well established in that market. Pollock is in good supply, and prices are lower, while Cape hake prices are relatively high at the moment.

Frozen hake fillet imports into Germany during the first quarter of the year were level with the same period last year. Italy, which showed good growth in imports of this product in 2013, registered a 20% decline in imports during the first quarter of 2014.

Surimi

Supplies

Observers are predicting a 50 000 tonne shortfall in global supplies of surimi this year. Global production has dropped to about 800 000 tonnes, which is down from 850 000–900 000 tonnes last year, mainly due to lower production in Southeast Asia. At the same time, global consumption of surimi is increasing. In total, consumption is estimated to have grown by 5% over the past year, to about 850 000 tonnes. With inventories relatively low, this could translate into rising prices.

Japanese production is set to decline this year. According to the National Surimi Manufacturers Association in Japan, frozen surimi production in Hokkaido declined by 32% in April. The main reason for the decline was the very tight raw material supply situation. The decline in domestic production is expected to be compensated by higher imports from the USA. Thus, total supplies should remain at the same levels as last year, at about 290 000 tonnes.

The South Korean company LF Food is investing in a new surimi plant in Indonesia to produce for the Thai and Polish markets. The factory will be set up near Jakarta to process tropical fish species into raw surimi in blocks. The blocks will be further processed in Thailand and Poland.

Market trends

US consumption of surimi has stagnated over the past few years, dropping from 185 000 tonnes in 2013 to 175 000 tonnes in 2013. This decline has worried the industry, especially since consumption saw a dramatic increase in the preceding decades: from 15 000 tonnes in 1982 to 185 000 tonnes in 2003. The US surimi industry is now taking steps to reverse this trend, focusing on product development and particularly on improving quality.

Meanwhile, one major player in the surimi sector, American Seafoods, saw strong growth in the market. In North America, the company expects sales to rise by 5–8%, while in the EU, they expect double-digit growth. Others are less optimistic. In France, the industry has grown from 100 to 5 000 tonnes per year over the past 25 years. However, the market is now flat, according to Fleury Michon. Since crab sticks constitute 90% of surimi products sold in France, one is tempted to suggest that product development should be high on the agenda.

According to Undercurrent News, surimi prices in the Republic of Korea are going up for the B season by 5–15%, with lower grade surimi seeing the largest price hikes. There are several reasons for this trend, one being that the purchasing power of the Republic of Korea consumer has improved, partly as a result of the strengthening of the won against the US dollar. Another factor that is driving prices up is the higher cost of raw material and higher operating costs. The Koreans are also currently negotiating for price increases with European and Japanese buyers, but expect smaller price increases in these markets.

Outlook

For cod, the supply situation is expected to be strong for the rest of the year, but if the ICES advice is followed, there will be a slight reduction in supplies next year. This should push cod prices up further, and the first signs of this increase has already been observed. Haddock prices will continue to climb, as supplies are tight. Supplies of Alaska pollock may be limited with prices also strengthening, but much depends on how the catch is channelled into surimi production. For surimi, a shortfall in supplies and thus rising prices is expected.