The report analyses the market situation over the year 2016 and the first quarter 2017.

Total supplies of groundfish (including farmed whitefish) are expected to be slightly higher in 2017 than in 2016, but prices are not expected to fall significantly. After a slow start to the cod season, fishing is getting back to normal.

During the recent North Atlantic Seafood Forum (NASF) in Bergen, much attention was focused on China and its role in the international seafood market. A Rabobank analyst claimed that China is set to impact the whitefish market considerably in the next ten years, largely due to the fact that the Chinese consumers are seeing significant improvements in their purchasing power and have a growing appetite for coldwater whitefish like cod. Thus, Chinese buyers will compete aggressively in the global market for cod and Alaska pollock as well as farmed whitefish like pangasius and tilapia.

Also in the Chinese market, there are increasing food sales through the internet. At present, Chinese consumers are spending about US$40 billion annually on online food purchases, but this is expected to grow to US$180 billion, demonstrating important implications for seafood purchasing.

Resources

Supplies of whitefish increased by some 2.3 percent in 2016, according to Kontali Analyse. While most species showed an increase, supplies of pangasius declined. The largest increase in supplies was in hake and Alaska pollock. In 2017, total supplies of whitefish are expected to increase again by about 2.3 percent with farmed whitefish accounting for all of the increase. Production of farmed whitefish is expected to grow by 4.5 percent, to 11. 3 million tonnes, while wild-caught ground fish is expected to decline by 0.7 percent to 7.3 million tonnes.

Global supplies of both cod and haddock are expected to be lower in 2017 than last year. Estimates presented at the Groundfish Forum suggested that supplies of Atlantic cod would total about 1.26 million tonnes in 2017, while supplies of haddock were estimated at 376 000 tonnes (both estimates in whole fish weight).

Russian Federation and Norwegian fisheries associations have agreed to a partial, self-imposed ban on trawl fishing for cod in the Barents Sea during the 2017 season. An agreement was reached in September last year that in effect will keep Russian Federation and Norwegian vessels from fishing in waters that have not yet experienced regular fishing activity, as well as in areas that may be vulnerable to trawl fishing. In addition, the vessels will help to map the seabed in areas around Svalbard.

In mid-December 2016 the North Pacific Fisheries Management Council decided to set the total allowable catch (TAC) for Alaska pollock in the Gulf of Alaska at 209 000 tonnes in 2017 and 163 000 tonnes in 2018. This represents a reduction compared with 2016, when the TAC was set at 258 000 tonnes. The main reason behind this decision is the expectation that the acceptable biological catch (ABC) will fall.

The Russian Federation decided to further grow its TAC for Alaska pollock by 3 percent for 2017, to total 1.89 million tonnes. In 2015 the Russian Federation TAC was set at 1.72 million tonnes and in 2016 at 1.84 million tonnes.

Landings and processing

Cod landings in Norway during January were somewhat down compared with last year, resulting in higher prices to the fishers. Total exports of fresh skrei (Arctic cod, Gadus morhua) dropped by 56 percent in January 2017 compared with 2016, but export prices rose by 11 percent.

Russian Federation Alaska pollock producers have been focusing on fillet production in place of headed and gutted (H&G) and surimi due to low prices for the latter products. Even though prices for pin-bone-out (PBO) fillet blocks are very low, the producers prefer to stay with this product rather than moving back into surimi. The weak ruble also makes this production slightly better paid.

Trade

Norwegian cod is increasingly being exported un-processed, simply because producers and exporters make a greater profit on this than on processed products. Indeed, the statistics show that fresh and frozen cod exports have increased significantly over the past ten years, while exports of frozen processed and salted/dried cod have stagnated or declined in volume. The first-hand value of fresh cod is currently at a record high, according to a Nordea analyst.

Norway has been targeting the Chinese market for a long time. As early as 1998, the Norwegian Seafood Council established a representative office in China, and exports have grown steadily since, until stopping abruptly after the 2010 Nobel Peace Prize was awarded to Chinese dissident Liu Xiaobo. Since then, Norwegian authorities have worked hard to improve Norway’s diplomatic relations with China, and now things are returning to normal. This means that Norwegian seafood can once again be imported into China in greater quantities. However, a number of technical issues remain outstanding and need to be sorted out before trade can resume in full.

Norwegian whitefish exports recorded a new high for the third year running in 2016. Total whitefish exports amounted to NKr13.8 billion (US$1.7 billion) in 2016. The increase in value was greatest for fresh and frozen products, while traditional products like klipfish (salted and dried cod fish), salted fish and stockfish (air-dried cod) struggled. Exports of klipfish dropped by 8 percent to 80 800 tonnes worth NKr3.7 billion, while the export value of stockfish dropped by 8.1 percent compared with 2015.

German imports of frozen cod fillets increased significantly during 2016. Total imports amounted to 171 000 tonnes worth US$653 million. This represented an increase of 27.6 percent by volume and 12.1 percent increase by value, indicating a price reduction per kg. All three major suppliers experienced increases: China by 52.1 percent to 73 000 tonnes, Poland by 15.2 percent to 38 000 tonnes, and Denmark by 11.1 percent to 20 000 tonnes.

German imports of Alaska pollock fillets declined slightly (-3 percent by volume) in 2016 to 122 900 tonnes. China alone accounted for 58.3 percent of this, or 71 700 tonnes, followed by the USA (28.3 percent of total) and the Russian Federation (10.4 percent of total).

Surimi

The A season for the Alaska pollock fishery in the Alaska Bering Sea started on 20 January. The Alaska pollock stock is considered to be stable, with the TAC remaining at 1.345 million tonnes, just 0.4 percent higher than last year. Production of surimi from this fishery is expected to amount to about 100 000 tonnes, while a similar volume is expected from the B season later.

Demand for Alaska pollock fillets in the USA is firm, while demand in Europe is weak. Surimi demand in Europe may be a little stronger. At the same time, surimi demand in Japan is edging upwards. In November last year, consumer spending on surimi in Japan rose by 3 percent, and this was the first time in nine months that a rise in consumer spending on surimi was registered.

Prices

Exporters are predicting that cod will to some extent replace salmon in a number of market sectors in 2017 because of the recent extreme high price of salmon. Over the past 18 months, cod prices have only increased by 16 percent, whereas salmon prices have increased by a significant 70 percent.

The Icelandic trawlers strike in the beginning of the year resulted in a shortage of cod, which translated into very high prices for Norwegian cod in February. However, Norwegian landings were also low, so the general supply situation was tight. The Icelandic strike ended on 18 February, with Icelandic fishers wasting no time in getting back to the fishing grounds. However, Icelandic fish could not reach the markets in UK and Europe until the end of February/beginning of March, and in the meantime Iceland lost trade to Norway, Canada and Alaska.

Prices for fresh Icelandic cod are expected to drop now that the Icelandic fleet is back in operation and in a hurry to fill their quotas after the strike. With the new Icelandic landings reaching the market, some expect a price collapse. The markets that were served by Iceland have had to find supplies elsewhere, and this new competition is likely to affect prices on Icelandic cod.

As Icelandic cod fisheries get back on track and landings in Norway pick up after a slow start, prices will come down.

For black cod, prices on the US west coast are extremely high at the moment. In early February, prices up to US$12.25 per pound for fish larger than ten pounds were registered. Whether they will stay high is a different matter. Black cod quotas in the Bering Sea, Aleutian Islands and the Gulf of Alaska increased by 6.5 percent for 2017 compared with 2016, though this was still 8 percent below the 2015 quota. Black cod is increasingly in popularity around the world, especially in Japan, and this may help keep the prices high.

In Japan, demand for black cod (also called sablefish) has been very high, while at the same time domestic landings have been weak. This pushed prices far up on the Japanese market during the winter. At the wholesale level, prices of US$20.10–20.27 were registered. Other Asian countries also have a strong demand for this fish.

Leftover stocks of last year’s Alaska pollock from the A season are pushing Alaska pollock prices down. Although there is a price difference between last year’s product and the 2017 product, the high cold storage holdings are having a negative effect on prices this year. Fishing companies in the Russian Federation and the USA as well as processors in China are feeling the impact of these low prices. Prices for single frozen blocks, PBO, are just half of what they were back in late 2008, when they peaked at US$4 500 per tonne.

Several participants at the NASF complained that Alaska pollock prices were low and falling. However, Kontali Analyse showed that prices were relatively stable through 2016. The outlook for 2017 is a different matter.

Outlook

The outlook for the global groundfish sector in 2017 seems to be one of more limited supplies of wild-caught fish with a slight increase in total supplies of farmed whitefish. Cod prices are forecasted to come back down to normal after a high start. Alaska pollock prices are dismal and likely to fall further. Global markets will be on look out for China, to see how this market develops. 

The report analyses the market situation over the year 2016 and the first quarter 2017.