Chinese shrimp importers renege on orders amid supply glut : Feb 6, 2018
Louis Harkell : UndercurrentNews
Chinese shrimp importers are sitting on product they cannot sell, according to an importer source based in the country.
The source, who buys shrimp and then imports it to China through Vietnam, said this has led importers to renege on “many orders”, forfeiting deposits.
“Though they’ve paid a deposit for the order, say for example 10%, due to the falling price they don’t want any container or their money back,” he told Undercurrent News.
“Current prices are very low. It’s not possible to sell before Chinese New Year,” he said.
He added that after Chinese New Year, prices “will definitely crash”.
The comments correspond with a shrimp panel discussion in at the Global Seafood Market Conference held in Miami in January. At the show — which was held on Jan. 23-25 — the panel said China “has high-priced stocked inventory for Chinese New Year. The market is in chaos [in China] because everybody wants shrimp but fear they are paying too much”.
China, from being one of the world’s largest exporters, is now a net importer of shrimp, industry sources say. During the Miami show Robins McIntosh, senior vice president with Thai agribusiness giant Charoen Pokphand Foods, said China is “taking the lead on imports and is the determinant [in the market]”.
But, farmgate prices for vannamei shrimp in China are surging on the back of strong demand for live shrimp, even as frozen, imported shrimp products are on the slide.
Farmgate prices have risen to CNY 80 per kilogram ($12.71/kg), for vannamei shrimp, head-on, shell-on, 60 count per kilo, in Guangdong province; 30% higher than at the beginning of January, according to Undercurrent News’ prices dashboard. In Hainan, prices for 80 count per kilo have matched a year-high of CNY 64/kg.
Chinese consumers are willing to pay a premium for live shrimp, according to a second source with a Chinese processor based in Zhanjiang, Guangdong. He said he expects prices to continue to rise at least until Chinese New Year and potentially thereafter. “Supply does not meet demand,” he told Undercurrent.
Prices are being driven by the seasonal drop in production; the holiday season; a poor harvest; and Chinese inflation, according to Landy Chow, general manager of Siam Canadian China.
“Last year in my city [Zhanjiang], an apartment cost CNY 8,000 [per square meter]. This year CNY 12,000 per square meter. That means [a] 40-50% [increase] in one year. I think such drastic increases will soon cause wider inflation especially food price inflation,” he told Undercurrent.
He added that domestic production is “no good”. “So, prices keep going up”.
However, during the panel at the Miami show experts said they expect Chinese shrimp production to increase in 2018.