Russia’s pollock players focusing on domestic market

Increased demand for fillets and firm prices raise attractiveness of the domestic pollock market.

While Russian fishermen expect pollock prices to strengthen in their foreign markets by the end of the year, they are now looking to the domestic market as a potential alternative.

"We can see some strengthening of the prices for frozen headed and gutted (H&G) pollock supplies to China," Alexey Buglak, executive director of the Russian pollock catcher association (PCA), told IntraFish.

"Currently, H&G pollock of 25+ cm is trading between $1,050 (€897) and $1,075 (€918) per metric ton, and we expect the prices to be further firmed traditionally by the end of the year”, he said.

Prices for frozen-at-sea (FAS) pollock fillets in the European market were at $2,450 (€2094) per metric ton of CIF in the third quarter of 2017, according to Russia’s PCA.

“And we are observing certain preconditions for the rise in the pollock fillets prices in the season B of 2017 and season A of 2018", Buglak said.

Dobroflot CEO Alexander Efremov also predicts a strengthening of pollock prices.

"Not a good fishing situation and the shortage of pollock in the Bering Sea will most likely drive pollock prices up," he told IntraFish, adding "it's too hard to predict exact pollock price trends, given a significant fluctuation of the Russian ruble exchange rate."

This opinion is partially supported by another Russian industry watcher.

"It is very difficult to predict the price development in the markets today as too many factors affect the markets," agrees Sergey Sennikov, representative of Norebo Group. “However, we don’t expect any significant decline in the prices”, he said.

Saving harbor

Russian pollock market players say they are being forced to balance between “an extremely weak” pollock fillet market in Europe and “a very weak” pollock market in China. And this is motivating them to turn their attention to Russia's domestic market as a sort "saving harbor."

"In 2017, the Russian market was more attractive than the foreign ones in some sectors," Buglak said.

He said the domestic H&G pollock prices in the third quarter of this year were around RUB 66 (€0.9/$1.10) per kilogram. Seeing this, Russian producers of FAS pollock fillets actively increased their supplies to the domestic market, diverting the volumes from the European market, where the prices were at a 20-year low.

"In the first half of 2017 the domestic pollock fillet supplies more than doubled from the level of the whole previous year, reaching 27,000 metric tons," said Buglak.

"The growth in the domestic demand for pollock fillets is facilitated by the development of the onshore fish processing, the state strategy aimed at the replacement of imported seafood, as well as attractive prices for pollock fillets of Russian origin as compared with the imported products," Buglak said. "We are positively looking at the dynamics of the Russian pollock market."

“It’s too early to state that it is a tendency, said Norebo Group's Sennikov, "but we hope that such development will continue both in terms of volume and prices and the consumers in Russia will prefer high quality FAS products while reducing procurement of double frozen fillets."

Meanwhile, Dobroflot CEO Efremov stressed the attractiveness of the domestic market for his company.

"The domestic market is becoming more attractive and lately our company is steadily shifting to pollock landings to the Russian market", he said.

"Production of FAS fillet blocks is limited in Russia and we do not expect any significant increase in the volume supplied from Russia to the European market in general," Sennikov said.

Currently, Russia’s main pollock fishery is conducted in the western part of the Bering Sea, with the harvest decreasing 9 percent by Sept. 24 as compared with the same period last year, to 337,000 metric tons, according to Russia’s PCA.

“In the area closer to border between the Russian and the US jurisdictions, catches are unstable in volume but the average size of pollock is good, running between 35-40 cm to 41-45 cm," Sennikov said

"Closer to the Navarinsky and Chukotsky Bay, the size composition is different, running from 30 to 35 cm on average, which means that many of the fishing grounds are avoided due to high bycatch of undersized fish," he said.

“In addition, an area in the northern part of the West Bering Sea was closed, which reduced stock’s accessibility for Russian fishing fleet,"Sennikov said.

Russian pollock season B in the Sea of Okhotsk will officially kick off on Oct 15.

"There are less than 80,000 metric tons of pollock quota left to be used, of which some volume will be harvested in the coastal fishery regime," Buglak said.

According to Russia, fishery agency, Rosrybolovstvo, as of Sept.27 the country’s total pollock harvest reached 1.469 million metric tons, up 8,000 metric tons over the same period last year.

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