Demand for pangasius is returning to pre-pandemic levels in major markets. There has been strong growth in the US market, while Chinese demand is returning to previous years. Foodservice is a key market for pangasius, and as such recovery has been largely dependent on its reopening in different regions. EU demand is sluggish, contributing to the further expansion of pangasius into alternative markets.

Production

Producers are still reeling from a turbulent 2020. Loss of restaurant sector sales in target markets led to low prices, causing many producers to go out of business or reduce stocking. In Viet Nam’s Mekong delta, where the vast majority of internationally traded pangasius is reared, stocking area was reduced by 9 percent in 2020. Despite this, production there during the first five months of 2021 was 523 900 tonnes, up 13 percent on the same period last year. It remains to be seen if this output can be maintained, or if supply will tighten later in the year. First sale prices are still low, and so it remains to be seen how 2021 stocking has performed in the summer months. Steadily rising prices for fishmeal will inevitably squeeze farmer’s margins and shift feeding strategies, although pangasius requirements are low relative to many other aquaculture species. As of July, the latest wave of COVID-19 cases in Viet Nam is having a marked impact on the industry, with processors pausing operations or operating at below normal capacity due to government restrictions.

Trade and markets

Viet Nam is by far the top producer of pangasius, and China in turn is the largest market. Imports from Viet Nam have picked up despite tighter border checks. Following recovery in the second half of 2020, exports to China picked up again in March and April 2021, increasing in value by 28 percent and 17 percent respectively year-on-year. Volumes are currently still below earlier years, but as imports tend to peak in the second half of the year the overall situation is still unknown. China has reported high prices for domestically farmed freshwater fish, for which imported pangasius may be a compelling substitute. Returning demand from US consumers has revived foodservice, and the US fish market has shown more robust recovery than many other major markets. US imports of catfish in the first quarter of 2021 were nearly double the volume of the second quarter of 2020, making them the highest since 2018. Viet Nam accounts for around 90 percent of pangasius imported into the United States of America, and the lowering of tariff rates for Vietnamese pangasius in 2020 means that the majority of existing exporters will now pay zero tariffs or a reduced tariff of USD 0.15 per kilo, down from USD 1.37 per kilo. Exports to the European Union and China fell by 13 percent in value between 2019 and 2020, with a significant proportion of this shortfall finding its way to Latin America and the Russian Federation. While Chinese demand began to return in the latter half of 2020, exports of Vietnamese pangasius to the European Union remain well below previous years, despite the new EU-Viet Nam free trade agreement and bucking the trend of other Vietnamese fish products. The value of Vietnamese exports of tuna, shrimps and prawns each grew by around 20 percent in the first four months of 2021 compared to the same period of 2020, while pangasius fell by 26 percent in the same period. The poor fortunes of pangasius in the European Union may be largely attributed to diminished demand from foodservice and high cost of freight. The next round of tariff reductions under the recent EU-Viet Nam free trade agreement is due in August, which will see tariffs for frozen pangasius fillets reduced from 6.5 percent to 4.5 percent.

Pangasius has been enjoying steady expansion into new markets for a number of years, and fluctuating demand in major markets has been a catalyst for further diffusion in these destinations. The return of Chinese demand, which accounts for the majority of imports by volume, has somewhat stemmed the growth of these trade flows, yet the popularity of this affordable and versatile fish is likely to persist. Increasingly important markets include Mexico, Colombia, Brazil, and the Russian Federation, which in the first quarter of 2021 saw year-on-year growth in imports from Viet Nam of USD 3.7 (+26 percent), USD 3.5 million (+37 percent), USD 2.6 million (+17 percent) and USD 2.1 million (+126 percent) respectively.

Prices

Vietnamese farm-gate prices remain low, at around VND 22 000 (USD 0.96) per kg in the beginning of May 2021. This is still higher than the VND 16 000 (USD 0.70) per kg that was seen for much of 2020. Export prices for frozen Vietnamese pangasius fillets to the United States of America rose to 2.87 USD/kg in the first quarter of 2021, significantly higher than prices seen in the second half of 2020. Prices in China and Brazil are reportedly rising, particularly for larger fillets for which there are currently limited inventories.

Outlook

Demand for pangasius is strong in established markets, while an increasingly diverse range of markets are absorbing more product. This has yet to translate into good prices for farmers, who will likely continue to face slim margins in the short term as supply is currently plentiful. Supply may well taper off in the second half of 2021. 2021 stocking levels for harvest in 2022 remain to be seen, but there could be tighter supply in 2022. At the time of writing, Viet Nam is experiencing a spike in COVID-19 cases, which will negatively impact national production, processing and logistics, and by extension global pangasius trade.