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Russian H&G pollock prices are tanking in China

And Russian market watchers give conflicting estimates about future trends.

The average price of the Russian H&G pollock going into the Chinese market fell to as low as $1,000 (€938.20) per metric ton in January, according to Russia’s Far Eastern Center for Regional Studies, an alarmingly low level for the pollock sector.

Some Russian market watchers predict the prices could fall even further below this level in the upcoming weeks, but are giving different forecasts and estimates.

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"This year we should be ready for Russian average H&G pollock prices at a level of around $100 (€93.80) lower than last year," Alexander Efremov, CEO at Kamchatka-based fisheries companies Dobroflot, told IntraFish.

Around 85 percent of the Russian pollock is processed in China.

"This means Chinese processors in fact have become monopolists, capable of conducting their own pricing policy," said Efremov.

In addition, there are only three to four large Russian pollock suppliers to China, he added: "too few to change this situation."

Efremov is not too optimistic about the trend for Russian H&G pollock prices in the Chinese market.

"I think, in February Russian H&G pollock prices will fall below $1,000 (€938.20) per metric ton and we should not expect a large increase in pricing in the future," he said.

The waiting game

Other executives were more positive about the market, though their expectations are tempered with big uncertainties for pricing in the future.

"The current low prices for Russian H&G pollock in China are temporary and caused by the Chinese New Year," Alexey Bulanov, assistant director at Karat holding told IntraFish.

"It is a seasonal trend and by the end of April we will most likely see H&G pollock price strengthening in China’s market, followed by the firm prices during 'B' season."

Bulanov pointed to the euro versus dollar exchange rate as a more fundamental reason, affecting H&G pollock pricing in China.

Chinese processors are buying Russian pollock in dollars but selling pollock fillets to Europe in euros.

"The weakening euro against the dollar reduces the profits of the Chinese processors," he said. "It has much stronger impact on Russian pollock prices in the long term."

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Bulanov dismissed the notion that China is losing its competitiveness as a pollock processing center due to increase in production costs, especially in wages.

"We don’t see that any large Chinese pollock processors have withdrawn from the market. They continue working," he said. "So, let’s wait a little while."

Bulanov also believes the domestic Russian market cannot be considered as an alternative to the pollock supplies to China even in the case of negative price trends.

"The Russian seafood market is limited in comparison to Europe. In addition, pollock products are not in high demand in Russia in contrast to the European countries," Bulanov said.

According to Russia’s federal statistics service Rosstat, frozen pollock made up the bulk of the country’s overall seafood exports, amounting to 781,900 metric tons in 2016, or 40.9 percent of the total.

Through Feb. 7, Russia's "A" season pollock harvest was up 2.3 percent over last year.


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