EU shrimp market under extreme pressure as supply shrinks : August 22, 2016
Black tiger supplies in particular are short with prices at ‘very high’ levels, and industry consensus is for a tough buying climate throughout 2016.
Dominic Welling : Intrafish
The European shrimp market is under pressure with demand soaring, a lack of available product and prices reaching very high levels for some species, industry players told IntraFish.
Importers in Europe currently have little to no stock at the moment and finding any from markets in India and Bangladesh is proving extremely difficult.
While both vannamei and black tiger supplies are causing difficulties, the situation for black tiger in particular is “a total nightmare,” one importer said.
Heiko Lenk, CEO at Bangkok-headquartered Lenk Frozen Foods Asia, told IntraFish severe weather conditions in Asia earlier this year – in Bangladesh and Vietnam specifically – meant there is currently much less volume of black tiger available compared with previous years.
“At this moment in the EU the stock position is extremely short,” he told IntraFish.
“Nobody has any product, the importers were moving very carefully at the beginning of the year waiting for the season to come, waiting to see what’s happening, and waiting for prices to come down.”
However in the period between March to May extremely hot temperatures of more than 40 degrees hit Bangladesh and Vietnam – the two main producers of black tiger – for a very long period.
This resulted in problems such as high mortality rates among the fries, said Lenk.
“We can now see a big, big shortage,” he said. “People thought the season was in full swing, and prices would come down, but in fact the opposite happened.”
With black tiger in very short supply, importers are changing to vannamei, resulting in fewer raw materials available for that species too.
“The only sources for black tiger is south of Vietnam and Bangladesh and everyone is jumping on that and the price are consequently at very, very high levels – up by more than 10 percent over the past few weeks.”
The prices compared with vannamei are up 20 percent higher in some sizes already, said Lenk.
“So black tiger is on the turn to become a specialty product,” he said. “People who want to secure black tiger have to pay a very high price now – that is the situation, very dangerous because black tiger prices already far beyond vannamei.”
The main demand for black tiger comes from central Europe, in particular Germany, Benelux, Austria, Switzerland. The UK is also a significant buyer.
Steve Huys, sales manager and co-founder at Belgium importer Seacorin, agreed it is very difficult to get any product currently, especially from Bangladesh, and there is a risk some importers will not be able to satisfy all their customers in the build-up to Christmas.
“There is no product, no production, nothing,” Huys told IntraFish. “We are getting cancellations from Bangladesh now of containers we bought two or three months ago. They don’t ship, or they say, ‘You can pay $1 (€0.88) to $1.50 (€1.30) more per kilo or no product.’”
According to Huys, suppliers in Bangladesh accepted too many orders in the past without having the product. With poor harvests in the last few weeks and months, few companies have product to sell.
“So prices are going very, very high, and if you get product you have to be very lucky,” he said.
Vannamei not quite as bad, but prices still rising
The vannamiei situation is not quite as dire as that of black tiger, but volumes are also down and prices are “extremely firm.”
India for example, has been faced with massive orders from United States in July while their shrimp production is around the same level of last year, so prices have gone up around 5-10 percent, said Lenk.
“There is a lot of demand and packers are hesitating a lot to offer new product,” he said.
According to Huys, prices for vannamei from India also increased $0.50 (€0.44) to $0.60 (€0.53) per kilo in the last two weeks. “There they can offer, but there is also a lack of product,” he said.
Nevertheless packers are expecting more product to become available in the next couple of weeks, he said.
“There is a big demand from all over the world for shrimp — black tiger and vannamei — and the problem is everyone goes on the same markets,” said Huys.
Bangladesh is very small in terms of production and its capacity is not very high, so the producers accepted a lot of orders without having any black tiger shrimp.
“So then everyone goes to India for vannamei and there also everyone gets overloaded,” said Huys.
Normally prices from Bangladesh and India are a little bit cheaper than other producing countries. For example, it is possible to source from Vietnam as well, according to Huys, but prices there can be $2 (€1.80), $3 (€2.70) or $4 (€3.50) more per kilo for black tiger and vannamei.
“Then it is a price question when it’s expensive like that,” he said. “When prices are that high, normal European buyers get scared.
“At the moment, it is really not easy, nobody has product, nobody has stock, and everybody wants to buy.”
And with the end of year approaching fast, this is also contributing to the market pressure.
For year-end sales, product will have to be shipped within the next month, said Huys.
“But nobody is getting product, I don‘t know what is going to happen,” he said.“With the end of the year coming everyone needs product.”
Huys said his company’s purchases may not be able to meet all of his customers’ demands.
Jim Gulkin, managing director at Siam Canadian, told IntraFish Vietnam supplies are improving on vannamei but black tiger supplies are still very short.
“Bangladesh is struggling to fill pending orders,” he said. “There is apparently a very big backlog at this time.
“It seems production is OK but demand for Bangladesh black tiger is very strong due to production problems in Vietnam and a changeover from black tiger to vannamei in India.”
Get used to the rise of China
The rise in demand from China is also adding to the pressure, a situation the world market needs to get used to, said Lenk.
“China has bought a lot of product and no one knows if China will step in again after August,” he said. “The world market has to get used to that – China is playing an important role for importing product now.”
While China is still producing, the demand is high and its import attitude has changed. The country bought huge volumes from India in the first six months of the year.
Gulkin confirmed that while Chinese production has improved over last year, the majority of that increase is getting consumed in the domestic market.
As a result, China continues to import large quantities of shrimp from other Asian and South American origins, he said.
Meanwhile, importers in the EU are now realizing there will not be a downturn in prices when it comes to vannamei, instead they are stable and on an upward trend.
“Prices are extremely strong and there is not the slightest sign of weakness,” Lenk said.
No relief in 2016?
According to Lenk, the tight market will last at least until November but he doesn’t see any signs of improvement before the new season starts next year.
Huys agreed that for black tiger there will likely be no improvement until next season, but was more optimistic about vannamei.
Siam Canadian’s Gulkin told IntraFish Indian vannamei supplies have been dropping off and are not expected to improve until September and as a result India prices have moved up substantially over the past three weeks.
“Kolkata and Odisha harvests from the first crop are finished, and there are some white spot disease issues in Tamil Nadu,” he said.
Black tiger supplies from India are “well down from previous years,” and the industry has moved over to vannamei.
Meanwhile, Indonesian supplies have dropped off over the past three weeks and prices have moved up as a result, said Gulkin.
“I do not expect substantially increased landings in Indonesia until November,” he said.
Thailand production is continuing to improve this year and current landings are good and expected to remain plentiful for the next 60-90 days, in particular large sizes, he said.
Thai production is expected to be at least 300,000 metric tons this year, he added.
Prices in Thailand are rising due to “extremely strong demand” from the US and Canada and lower production in other Asian regions.
In general, Gulkin said, prices will continue to move up to some degree, and he expects the market to remain very firm through the end of the year.