Imports fell below those of last year in the major markets following lower than average supplies from Southeast Asia, with export price going up again in July.

There has been no real recovery in Asian farmed shrimp production, still affected by EMS disease, although the problem has been identified and will be brought under control with time. The weaker yen, countervailing duties in the USA and the Eurozone crisis have also taken their toll on import demand.

The production of farmed shrimp in Asia, dominated by vannamei, remains lower than last year as a result of the early mortality syndrome (EMS) disease outbreak in Southeast Asia. Shrimp production in Thailand is down by half the volume produced last year. Other countries in the region such as Malaysia, Indonesia and Viet Nam are not unaffected by this problem either. Production of black tiger shrimp has also been lower as more and more farmers in Viet Nam and India have switched to vannamei shrimp, particularly in intensive aquaculture.

Meanwhile, shrimp prices in international trade inched up although there has been no real boost in demand in the traditional markets. The EU market remains affected by the Eurozone crisis and the implementation of countervailing duty has slowed imports in the USA, while the weaker yen halted import growth in Japan. However, shrimp prices remained firm in international trade during the first half of the year. The price rise for black tiger shrimp has been sharper than for vannamei shrimp. 

Supply

Farmed shrimp production in Thailand remains much lower than last year, and has been seriously affected by the EMS disease since late last year. Although the disease problem seems to be under control now, many farmers have reduced stocking density in the ponds to avoid further occurrence of the disease. January to March production was slashed to less than 60 000 tonnes - a sharp drop from the average 100 000 tonnes and the trend continued during the 2nd quarter. This year’s production is unlikely to exceed 300 000 tonnes compared with 500 000 tonnes produced last year, the respective authorities confirmed. In May/June, the ex-farm price of vannamei was 60-85% higher than that of last year and, as a result, exports of raw frozen shrimp became uneconomical for processors. Now they are turning more towards exports of value-added products, for which demand is relatively better in the Japanese market and also in the USA.

In June, scientists at the University of Arizona discovered the pathogen behind the disease, indicating that EMS is caused by a bacterial agent (Vibrio parahaemolyticus) that destroys tissues in the shrimp’s digestive organs. The virus is reported to be not dangerous to human health. The identification of the disease agent is an important breakthrough in the prevention of the spread of the disease through import/export.

In Viet Nam an increasing number of farmers in the Mekong Delta have shifted to vannamei aquaculture, which may lead to a 20-30% decline in black tiger shrimp production this year. This could be one of the reasons for the overall increase in exports from Viet Nam to the Japanese and US markets.

The trend is similar in India, which is now possibly the second largest export processor of farmed shrimp, after Thailand. Farmed vannamei shrimp production almost doubled last year. Farmers have learnt how to balance the harvest against the market demand. Official reports estimated a production of 230 000 tonnes of vannamei shrimp in 2012. The volume could be 1.5 times more this year. However, black tiger harvests have declined because of the diversification in the farmed species.

Market Trend

The unusual supply shortage during the peak farming season in Asia, the prolonged Eurozone crisis, the weak yen and the US ruling on the countervailing duties have all combined to bring negative impacts on the international trade for shrimp, but raw material shortage has kept shrimp prices firm worldwide.

Market growth was stagnant in the two large western markets of the EU and USA, with imports in these markets at a 5-year low during the first quarter of the year. Increased landing costs associated with the yen depreciation in Japan affected household demand for raw shrimp compared with processed shrimp.

Meanwhile, in Southeast Asia, stable consumer demand is keeping fresh shrimp prices high, compared with frozen products for export markets. In India, smaller sizes of fresh vannamei continue to enjoy good demand in the local market.  

Japan

Wholesale prices in Japan have gone up significantly, which has led to reduced demand in supermarkets as they are not able to offer promotional sales during high consumption seasons. 

The price of raw frozen vannamei was one and a half times more in April than the same month last year. The price of black tiger shrimp went up by more than 30%, affecting the sales volume of raw shrimp.

The yen depreciation caused a 15-20% rise in import prices, while export prices from the country of origin remained stable. As a result of the yen depreciation and rising shrimp prices, Maruha Nichiro predicted that this year’s imports of raw frozen shrimp would be 20% or 25 000 tonnes lower than last year. In order to compensate for rising import costs, seafood marketers in Japan are focussing on the promotion of processed products, including shrimp.

During the first quarter of 2013 imports of raw frozen shrimp were 10% lower, but processed shrimp imports increased by 21% compared with last year. Thus the share of prepared shrimp in total shrimp imports increased to 30% against 25% a year ago. However, overall imports of shrimp during January-March posted a 1.13% decline, as raw frozen products had a 68% share in total shrimp imports. Imports of farmed vannamei have also increased from Ecuador as result of supply shortfall from Thailand.

The Argentinean shrimp ‘seabob’ is still dominant in the market and imports even increased slightly compared with last year. Cumulative imports of shrimp during the first four months of the year remained below the level of last year.
Supplies of black tiger shrimp have been lower from the traditional sources of India and Viet Nam and import prices of 16/20 counts headless shrimp are high at USD 16/per kg from Indonesia and USD 15/kg from Viet Nam and India. The rising import cost of raw frozen shrimp is making re-processing more and more difficult in Japan. Therefore many companies are changing their procurement policies and moving towards processed shrimp imports from Thailand, Viet Nam and Indonesia.

USA market remains little affected by the implementation of countervailing duties

Indications at the International Boston Seafood Show in March showed that the market was not ready to invest much in future supplies as fewer business deals were signed between importers and suppliers than expected. Even the uncertain supply of shrimp from Southeast Asia did not encourage contingency purchases.

Two factors have been prominent in the US shrimp market during the last three months.They are, firstly the decision of US Customs concerning the application of countervailing duties on frozen warmwater shrimp from seven producing and exporting countries (Ecuador, Indonesia, Thailand, Viet Nam, China, India and Malaysia) and secondly, the prevalence of the early mortality syndrome (EMS) in some Asian countries, which has caused a dramatic fall in supplies, especially in Thailand, the leading exporter to the USA.

It seems that the preliminary decision of US authorities to implement countervailing duties (CDV) has not produced much change in the shrimp market (apart from higher administrative expenses). Malaysia is the only country really affected (a 62.74% tariff was applied while the next highest was Viet Nam at 6.07%). Other countries received very low or no tariffs. The final determinations by the DOC will be made known in mid-August while those of the  International Trade Commission (ITC) will be available in September. As there is a possibility of applying “retroactive tariffs” later, many buyers have stayed away from active imports.

Reactions from countries on this issue were mixed. In Viet Nam representatives of the aquaculture sector described CVD as “absolutely irrational” and maintain that if they remain, Vietnamese exporters will not be able to continue exporting shrimp to the US market. Ecuador did not receive any countervailing duties and felt that this confirmed their position that shrimp farmers did not receive government subsidies.

Imports

The USA imported nearly 2 000 tonnes less shrimp in March 2013 compared with the same period in 2012. Cumulative imports were down 8.35% because of reduced production in Thailand and supply shortfall in Ecuador, Indonesia, Viet Nam and China during that period. However, imports increased significantly from India (+70%).

Latin American countries, in particular Mexico, have also been hit by disease, in this case white spot disease, and this has contributed to the overall reduction in supplies to the US market.

Consumer demand showed some positive signs during the reporting period. According to the US Conference Board, consumer confidence rose in May. Although the gasoline price has been rising, so far it has not affected spending power. 

In line with increased consumer confidence, wholesale prices went up until May for most categories and from most sources, and have remained stable since then. However, some buyers complained that the price rise was too fast and reached a point when some end users reduced shrimp purchases. This also contributes to traders’ reluctance to invest heavily in large purchases. US importers were waiting for some price weakening in exporting countries as is typical at the beginning of the harvest season in June or July but this did not happen. Instead domestic wholesale prices remained relatively low compared with the price demanded by suppliers. Importers supplying the food service industry are not purchasing without previous contracts because of the prospect of increased supply during the main harvest period (likely to be late June and July this year).They prefer to wait and see what will happen with prices and instead use up the remaining stocks in coldstorage inventories.

Europe: sluggish demand continues

The shrimp market in recession-hit Europe remained generally sluggish and trading activities were limited. Few orders were received by packers in the past few months. Supply shortages and high shrimp prices have discouraged European buyers from signing big contracts and deals with smaller exporters, who offered lower prices to meet immediate demand, were preferred. The lack of demand is reflected in shrimp imports into the EU-27 (external trade), which totalled 115 500 tonnes for the first quarter this year, down by 6.9% against the same period of last year. Ecuador, the largest shrimp supplier to the EU, shipped less (-16.4%) while imports from India, Argentina and Bangladesh were up 11.8%, 40.7% and 3.9% respectively.

Among the major importing countries only France and Italy posted positive growth this year. Shrimp imports into Italy grew by 7.8% during Q1 2013 with more shipments from Spain (+33.3%) and Ecuador (+5.3%). Imports into France were slightly up by 1%, with increased supplies coming from Ecuador (+18.6%) and India (+18.2%). France emerged as the largest shrimp importer in Europe together with Spain.

Imports into Spain continued to decline and dropped by 7.5% for the first quarter of 2013. Sharp supply drops were reported from China (-24%) and Ecuador (-43%), which were not compensated for by increased imports from Argentina (45.5%),the largest shrimp supplier to Spain. Spain exported more or less the same amount for the first three months of the year against last year with more sales reported to Italy.

The German market, which traditionally buys more shrimp from Asia, was hit hard by supply shortages and high prices. As a result, imports into Germany dropped by 18.2% in quantity this year with significantly lower supplies from Thailand (-25.9%), Viet Nam (-33.3%) and Bangladesh (-12.5%) while imports from India increased by 8.3%.

EMS-hit Thailand also shipped less shrimp to the UK (-7%) while British importers tried to fill the gap by importing more product from Bangladesh (+15.8%). Overall shrimp imports into the UK, however, declined by almost 5% during the review period.

The current scenarios have also squeezed profit margins both for packers and traders. As a result trading activities into and from the Netherlands and Belgium posted negative growths. Shrimp imports into the Netherlands and Belgium for Q1 2013 declined by 28.9% and 15.1% while exports also fell by 2.0% and 16% respectively against the previous year.

The volatile supply of coldwater shrimp also affected Denmark as the main processor and exporter of this product. More shipments from Greenland (+5%) and the USA (+5%) into Denmark could not offset lower supply from Canada, which fell by 38.2% this year. In contrast Denmark’s exports posted positive growth (+4.4%) thanks to increasing shipments to Italy and non-European markets, which compensated for the declining sales to the traditional markets of Russia (-21.7%) and Germany (-16.7%).
Asia: Strong demand from China

Despite slower economic growth and the government drive against lavish official spending, demand for shrimp in China maintained strong growth as reflected in Chinese imports. During the first quarter of 2013, frozen shrimp imports increased by more than 45%. Canada remains the largest supplier and shipped +38% more during the quarter, followed by Thailand (+57%) and Ecuador (+150%). Chinese buyers are increasingly active in India and shrimp import from this source doubled during the reporting period.

According to the Marine Product Export Development Authority (MPEDA) of India, vannamei shrimp exports increased to USD 730 million during the fiscal year 2012-2013 against USD 385 million in the previous fiscal year. In volume vannamei exports were recorded at 91 000 tonnes compared with 40 787 tonnes previously.

The drop in harvests coupled with the higher costs of labour and the strengthening Baht have dampened the Thai shrimp industry’s growth this year. According to the Commerce Ministry, the value of shrimp exports in the first four months of 2013 dropped 19.3% year on year to USD 643 million.

Outlook

In Asia low production in Thailand continues to be a concern with a drop of 40-50% or more than 200 000 tonnes in 2013 a possibility. On the contrary Indian and Indonesian supplies of vannamei are expected to be higher than last year, which will fill the supply gaps to some extent, particularly in the US market. Indonesia produced around 457 000 tonnes of shrimp last year and is expected to add another 200 000 tonnes by 2014.

The forecast in the major markets  does not indicate much recovery in consumer demand and overall supply will be balanced by the existing lower demand. Thus prices are expected to be generally stable. However, those markets that require black tiger shrimp will see a supply shortfall and rising prices in comparison with those that prefer vannamei shrimp.
Imports into the US may not go down much further, and the CVD status of the seven affected countries is likely to be confirmed by September. In Japan the current waning demand for raw frozen shrimp is likely to persist, but value added shrimp imports could be higher according to the current market trend. The EU shrimp market is expected to continue to be weak for the next few months as raw material shortages will maintain high shrimp prices. In-store promotional drives by major supermarkets may help to boost sales for food in general but not for shrimp.