The report analyses the market situation until June 2017

Reduction in the Barents Sea cod quota is expected, although it is uncertain how much the reduction will be. Consequently, some price increases are expected. For the surimi market, trade appears to be picking up.

Resources

The International Council for the Exploration of the Sea (ICES) has recommended a 20 percent cut in the Barents Sea cod quota for 2018. However, the Joint Russian Federation-Norwegian Fisheries Commission in October agreed on the 2018 quotas, which include a 13 percent cut in the Barents Sea cod quota to 775 000 tonnes, and 13 percent cut in the haddock quota to 202 305 tonnes. Observers expect no drama in the market as a result of these cuts, particularly since the 2017 quotas were historically high.
In 1970, landings of North Sea cod peaked at
270 000 tonnes. Since then, stocks have deteriorated due to overfishing, bottoming out at only 44 000 tonnes in 2006. Preservation measures were introduced in 2007, and included lower quotas and a ban on harvesting small-sized fish, with both of these measures proving successful. With stocks recovering, the annual cod catch in the North Sea has now increased to 150 000 tonnes. In fact, North Sea cod has been awarded the Marine Stewardship Council (MSC) seal of approval as a sustainable stock, to the great relief of the industry.
It remains to be seen whether the MSC label will impact buyers’ choices. IntraFish claims that the United Kingdom retailers are embracing North Sea MSC cod. Retailers such as Waitrose and Marks & Spencers are planning to offer MSC North Sea cod very soon. However, nothing has been noted about how consumers are reacting to the MSC listing.
Chile’s National Service of Fisheries and Aquaculture (Sernapesca) introduced a ban on the southern hake fishery that went into effect from the 1 August to the end of September. This is not the first time such a suspension has been announced. It has become an annual suspension of this fishery in order to protect the species.

Landings and processing

German whitefish processor Frosta is claiming that in order to increase sales of frozen whitefish in Germany, the industry needs to introduce new value-added products and move away from selling blocks. Of the approximately 3.4 million tonnes of Alaska pollock caught this year, about 325 000 tonnes will be block frozen fillets and 64 000 tonnes individually-quick-frozen (IQF) fillets.
Iberian hake landings have fallen 37 percent over the past ten years, despite stronger stocks. Scientists continue to recommend cuts in the quota, although the status of the stocks have improved. However, last year, there was an increase in landings by 20 percent, to 8 063 tonnes.

Trade

After several years of low prices, the market for Alaska pollock products now appears to be improving, according to US Alaska pollock producers. However, there is still some opposition to price increases in the German market for pin-bone out (PBO) blocks, but at the same time, there seems to be more stable demand in this market. Supply and demand now appears to be more balanced, and there is therefore reason to expect a better market outlook for 2018.
Demand for deepskin Alaska pollock (more of the flesh is removed for it to be a skinless fillet) is increasing in Asia, North America and Europe, and consequently, producers are increasing their production. Deepskin production in the United States of America was up by 33 percent during the A season, and by 43 percent during the B season until the end of July. Part of this demand is channelled through fast food chains like McDonalds and Subway, which are both promoting Alaska pollock. One reason for this increase in Alaska pollock demand is that cod is in short supply, with cod prices rather high.
The Russian Federation whitefish market is changing. Domestic Alaska pollock consumption is shifting from more basic, low-processed products to more value-added products. At the same time, Russian Federation Alaska pollock exports are on the rise. During the first six months of the year, the Russian Federation exported some 483 200 tonnes of Alaska pollock, after a sharp drop in exports in 2014 and a moderate increase in 2015 and 2016. More fillets are being produced to feed the domestic market, while imports of Alaska pollock fillets have gone down. This is partly a result of the ban on imports from a number of western nations.
In contrast, sales of cod and haddock in the United Kingdom were up during the 12-month period from July 2016 to June 2017, according to data from A.C. Nielsen. Cod continues to be the favourite whitefish sold in supermarkets, yet haddock is getting the best prices. Most of the cod is sold frozen, while only about one third of cod sales are in the form of chilled fish. In total, supermarkets sold 48 600 tonnes of cod during this period, up by 4 percent compared with the same period a year earlier.
During the first six months of 2017, Norway exported 249 000 tonnes of cod, saithe, haddock and other whitefish at a free-on-board (FOB) value of NOK 8.1 billion (USD 1.0 billion). This represents an increase of 9 percent by volume and 10 percent by value. The strongest increase was registered for whole frozen whitefish and for whole klippfish. There was a particularly strong growth in exports of whole frozen cod to China, which increased by 12 percent in volume terms to 12 800 tonnes, and by 23 percent by value, to NOK 364.8 million.
During the first half of the year, China imported a total of 104 200 tonnes of frozen cod, which was actually a decline by 4.4 percent compared with the same period in 2016. The largest suppliers during the first half of the year were the Russian Federation (38 percent of the total), the United States of America (33 percent of total) and Norway (17 percent of total).
Chinese Alaska pollock imports during the first six months of the year grew by almost 15 percent, to 448 800 tonnes. By far the largest part of this came from the Russian Federation (92 percent). Chinese exports of frozen Alaska pollock fillets fell, though, to 109 900 tonnes (-4.8 percent) during this period. Most of the decline was caused by falling exports to Germany, yet German imports of frozen fillets of Alaska pollock increased overall by 7.3 percent to 71 700. Both the United States of America and the Russian Federation gained market share from China.
While a lot of this imported whitefish is processed and re-exported, there is also a growing amount being consumed in China itself. 
German frozen cod imports fell during the first half of the year to 17 900 tonnes, down from 18 200 tonnes in the same period of 2016. The main suppliers were China (9 800 tonnes) and Denmark (2 300 tonnes). 
Total cod imports into the United States of America were stagnant during the first six months of 2017 at 30 700 tonnes compared with 30 800 tonnes during the same period in 2016. The main suppliers were China (23 300 tonnes or 76 percent of total) and Iceland (2 400 tonnes or 8 percent of total).

Surimi

The global market for surimi seems to be improving. There is a shortage of high-grade surimi, and observers believe there will be a general shortage of surimi this year. During the A season, surimi production was up marginally from 80 200 tonnes in 2016 to 83 100 tonnes in 2017. During the B season, surimi production is increasing more, from 44 800 tonnes in 2016 to 50 600 tonnes in 2017 (+13 percent).
The US surimi market has been flat for the past five years or so, but now there is some optimism. In 2017, US surimi consumption is expected to reach 100 000 tonnes, up from 90 000 tonnes last year. Increased promotion through social media, as well as improved product development in the form of “meal kits” and poke, seems to have given results.
Japanese landings of raw material for surimi have been very tight lately, and as a consequence, imports are going up. For 2017, it is expected that imports will rise by about 10 percent to 263 000 tonnes. Most of the rise in imports will be sourced from the United States of America and India, according to the European Surimi Forum. Imports from the United States of America rose by 32 percent over the past five years to reach an estimated 130 000 tonnes in 2017, while imports from India have grown by 30 percent to about 38 000 tonnes.
The Spanish market for surimi is growing rapidly, with the chilled sector driving this growth. Total sales of surimi in Spain have now reached about 48 000 tonnes, of which about 30 000 tonnes is channelled through retail sales.

Prices

Russian Federation headed and gutted (H&G) Alaska pollock prices remain low. Prices for Russian Federation Alaska pollock shipped to China in June were as low as USD 980 per tonne. Still, these prices represent a very slight increase compared with May. Last year, Alaska pollock prices were at around USD 1 080–1 100 per tonne. Observers are now expecting these prices to increase by perhaps USD 75 per tonne before the end of the year.
Tight supplies of Atlantic cod are expected to push prices up. Iceland’s 5 percent increase in its total allowable catch (TAC) is not enough to offset Norway’s 20 percent drop in TAC, and the result seems to be inevitable price hikes. However, it should once again be noted that the 20 percent cut in Norwegian quotas is still only a recommendation. The final quotas will be set by Norway and the Russian Federation jointly in November.
Prices for Atlantic cod have been pointing upwards for some time, albeit with short-term ups and downs.
On the US market, prices for cod fillets as well as Alaska pollock have been flat. In international markets, on the other hand, cod prices are still showing a rising trend, albeit at a somewhat weaker pace.