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Thaifex 2018 blog: Tuna and shrimp suppliers step away from EU markets

All the news from the show floor.

Friday, June 1, 3.45 p.m. ICT

Trang shrimp price minimum 'better than nothing'

The Thai state of Trang approved a minimum price program for shrimp raw material to help local farmers and help prevent a further fall in prices in the coming days, reports Bangkok Biz News.

There will be a set minimum price for 10,000 metric tons of shrimp over 60 days, from May 25 to July 23, to improve the current situation.

However, given the little volumes that the agreement covers, the industry is not certain this will have a significant impact for the sector.

“It’s small volumes, but it’s better than nothing," Marine Gold Products Marketing Executive and International Procurement Peeraset Buranasang told IntraFish.

“But at the end it will depend on the global market; that’s what sets prices.”

Thai farmers and processors have been in talks for months without reaching an agreement, with farmers not wanting to lower their prices and processors struggling to get any margin on exported product.


Friday, June 1, 1.03 p.m. ICT

Surimi raw material prices climbing, but there’s a limit

Thai surimi processor Smile Heart is dealing with an increase of Alaska pollock prices of 15 percent from last year’s 'B' season, and with even higher prices for itoyori.

Around 60 percent of the company’s production is Alaska pollock surimi, and the rest itoyori, although there are plans to increase the use of local fish.

“Alaska pollock has gone up, and although we have a very healthy supply due to the long-term relationship we have with suppliers, it is a volatile market,” Rojjanin Phatchararuangkij, managing director at Smile Heart, told IntraFish.

“Itoyori prices are a bit higher than Alaska pollock, but on par with last year's prices.”

At the moment, Alaska pollock is prized at more than $3 per kilo, he said, and increasing, although thinks there is a limit.

“I don’t think it will go much higher, but I cannot be sure.”

The company’s main market is the United States, where demand for surimi is increasing year-on-year. Europe remains an important market but is not a priority, Phatchararuangkij said.


Thursday, May 31, 4.40 p.m. ICT

There's a war raging in Europe’s competitive value-added market

Philippines-based milkfish producer Fisherfarms is investing in new technology and pushing its focus on to value-added production to enter new markets.

Encouraged by a number of accolades, including a 2-star Superior Taste Award given this year to the company’s Beechwood Smoked Pure Belly, a product high in Omega 3 and black in color, the firm sees there is consumer acceptance. But the main challenge is how little known the fish is outside the Philippines.

“It is a challenge," Fisherfarms CEO Imelda J. Madarang told IntraFish. "We have developed very interesting products, fish sausages and other lines, and people like it but the fish is virtually unknown everywhere.”

One of the most expensive parts of the process is the deboning. The fish has 280 very thin bones that can only be removed manually, and although the rest of the processing is automated, labor costs are high.

“This is a barrier," Madarang said. "We have heavily relied on the sale of marinated fish, very basic processing, for Philippine expats around the world, but beyond that it is too difficult to find a public even if the product is great."

That is the reason why the company is now looking into jumping on the health, taste and convenience trend, where people are not necessarily looking for a certain fish species, but for a concept. However, this market is also challenging.

“We have to deal with all the factors affecting production: quality and size variances, costs volatility that has to do with climate, temperatures, etc., and then we have to manufacture the perfect product at a fixed price that’s agreed with the buyer” she said. “It’s hard to balance it all.”

The company has a development team working in branding and packaging, where there is a “competition war,” according to Madarang, to make the product stand-out.

“We are going to all the trade shows, scanning packagings used in the different markets,” she said. “In this market, people buy fish sausages, or fish cakes, they are not after the species, really, but that is good because that way we can compete in a market where the fact that the species is unknown is not a barrier.”


Thursday, May 31, 11.45 a.m. ICT

Thai Union expects shrimp demand to rebound in Q3

The current situation with low shrimp prices and demand could normalize in the third quarter of the year with a decrease in production, Tanyarat Yokdee, deputy marketing manager at Thai Union, told IntraFish.

According to her, Thai vannamei shrimp output could fall this year, from the 300,000 metric tons farmed in 2017 to around 250,000 metric tons.

“Demand at the moment is very slow, prices are below costs and farmers are not happy,” Yokdee said.

“There’s current dialogue between farmers and the government to increase prices, and production should also slow down towards the third quarter, so supply should be tighter and prices should normalize.”

Thai Union continues to focus heavily on the United States, but it’s also shifting toward Asian markets, which account for around 8 percent of the company’s sales.

One of this year's strategies is the production of value-added products from imported species.

“We introduced the Argentinean shrimp line last year and although volumes are still small, this is an interesting market,” she said.


Wednesday, May 30, 2.30 p.m. ICT

Surimi giant targets US for big brand push

Thai surimi giant Lucky Union is in talks with US importers to sell its Kani-branded products nationwide in a move aimed at boosting branded production by 30 percent in 2019.

The 35-year-old Kani brand is popular across Thailand, but is not present in overseas markets. However, the company has set its expansion as a short-term priority.

“Some big customers have shown interest in the brand and we are very excited about this,” Suradech Chinsakuljaoren, marketing director at Lucky Union, told IntraFish.

The firm does 60 percent of its production under original equipment manufacturer (OEM) contracts, and 40 percent under own brand manufacturer (OBM) contracts, but it wants to increase its branded business.

Lucky Union has the advantage of being able to ensure stable supply and high quality, Chinsakuljaoren said.

“Because of our big network customers know we always have product available in our factories,” he said.

Raw material prices are high at the moment, between $2 and $3 up for itoyori since the last quarter of last year, he said, but demand is strong in key markets.


Wednesday, May 30, 1.25 p.m. ICT

Chilean salmon farmer eyes Southeast Asian markets

Chilean salmon farmer Australis has a booth this year's Thaifex show and is looking for opportunities in Southeast Asia. It is seeing growth potential in countries such as Thailand, Vietnam and Singapore.

“Some countries are interesting because they are processing hubs, and some others because they have huge tourism, we want to see what opportunities there are,” Angel Corta, sales manager at Australis, told IntraFish.

Although the fresh market in Thailand is still off the table due to logistical barriers, Australis has a few big clients in Thailand for frozen salmon.

Australis has significant presence in other Asian markets such as China, through the Chilean joint venture New World Currents, and in Japan, where it sells salmon directly.


Wednesday, May 30, 1.07 p.m. ICT

Vietnam pangasius prices stable

Vietnamese pangasius giant Hungca is focusing on China as demand in Europe is shrinking and is difficult to meet, Ngoc Chau Nguyen, sales executive at the firm, told IntraFish.

Following a period of “very high prices” at the beginning of the year, prices have been stable now for two months and are expected to stay this way during the slow summer season.

Processors expect them to pick up around mid-fall as importers begin stacking up inventories for Chinese New Year.

Hungca exports around 200 containers of 25 kilos each a month, and half of its production is going to China.

“We are not focusing on Europe, they order very small fish and we harvest larger sizes. It’s hard to fill up a container for them,” Nguyen said.

The high prices of the beginning of the year were the result of strong rains that led to a lack of raw material, but the situation is now better while demand is still high.

“Demand from China is very strong and production is at normal levels, so prices are set to stay stable for now,” he said.


Tuesday, May 29, 4.43 p.m. ICT

Thai exporters: EU not a priority market

The Thai seafood sector is increasingly stepping away from Europe and focusing on other markets as the EU bloc remains unprofitable for exporters, insiders from both the tuna and shrimp sectors told IntraFish.

While Thai giant Sea Value has offices in the Netherlands and a plant for tuna loins processing in France, the company does not have any investment plans in Europe, at least not in the short term.

“Instead, we’re focusing on Asia, which is 25 percent of our market," Somkiat Threamruktakul, marketing division manager at Sea Value, told IntraFish. "Europe is between 20 percent and 22 percent, but the only way we would look at it for investment is if we were able to negotiate better tariffs.”

Likewise, in the shrimp sector, traders are not looking at Europe.

“It’s not a market for us at all, it’s pretty dead for Thailand,” Jim Gulkin, managing director of seafood trading company Siam Canadian, told IntraFish. “Thailand is very much focused on the United States, Canada, Japan, local markets, but not Europe.”


Tuesday, May 29, 4.26 p.m. ICT

Thailand touts progress on legal workforce enforcement

The Thai seafood industry is close to achieving its goal to ensure that the entire foreign workforce in the seafood industry is registered and legalized, Kalin Sarasin, chairman of the Thai Chamber of Commerce, told IntraFish.

“At the moment the government is enforcing new rules to regulate the working situation of all employees and in fisheries we are close to 100 percent,” Sarasin said.

“We are working with all companies to enforce these regulations and are putting measures in practice to get rid of those who do not abide by them.”


Tuesday, May 29, 3.20 p.m. ICT

Exec: Thai shrimp sector needs to figure out a way to stay relevant

The situation in Thailand is a struggle at the moment and is worsened by the divide between shrimp producers and processors, Jim Gulkin, managing director of Siam Canadian, told IntraFish.

Disagreements over prices and the need of collaboration between all involved in the sector are leading to an internal crisis, adding to the already complicated global situation.

As farmers try to increase shrimp prices for processors, the latter struggle to position the product in markets where shrimp from other origins is sold at cheaper prices.

“By increasing the prices they make it very difficult for processors to export,” Gulkin said.

Although it’s in the interest of both sides to work together, at the moment there is “more yelling than talking,” he said.

In the past Thai farmers avoided working with processors, encouraged by high demand from Chinese brokers, who at the same time were not as demanding in terms of certification.

However, as other countries such as India and Indonesia sell at lower prices, the Chinese market is opening up to them, leaving Thai producers struggling to sell their product.

“Processors need to convince farmers that to succeed they need helpers, and that’s processors,” Gulkin said.

According to him, the problems in the Thai shrimp sector are piling up, and a number of issues need to be tackled.

“Thailand needs to figure something out to stay relevant. In terms of volumes it can’t compete, so it’ll have to be in efficiency, infrastructure, value-added…I don’t know,” Gulkin said.

The country produced 300,000 metric tons of shrimp in 2017 and production is expected to remain flat this year.


Tuesday, May 29, 12.35 p.m. ICT

Processors still not hurting 'that much' from low shrimp prices

Vannamei shrimp processors and exporters are “not hurting that much,” but are still wary of how the situation might develop as prices are starting being reflected in the end markets.

“We pay lower prices for shrimp but our clients are also paying less and less,” Theerawat Katanyukul, vice president of finance at Surapon Foods, told IntraFish.

“But farmers are really concerned at the moment,” he added.

Thailand's shrimp farming sector is perhaps the one that’s hurting the most from the current price situation. The country never fully recovered from the Early Mortality Syndrome (EMS) crisis in terms of its production and market share, and the current oversupply from neighboring countries will make this task harder.

“India and Vietnam have pretty much all the market share, and India is producing very, very high volumes,” Katanyukul said.

However, Thai companies have found a market opportunity with premium products going to other countries in Asia.

“Japan is what makes 80 percent of our shrimp sales, while Vietnam and India are focusing on the United States and Europe,” Katanyukul said.

Although the sector is expecting the oversupply situation to go on “for a year maximum,” the truth is no-one can predict what will happen, he said.

“For processors it’s not that bad yet, but in the long run the market will balance and it will affect us too.”


Tuesday, May 29, 11.00 a.m. ICT

Skipjack prices 30% below 2017’s peak

Skipjack prices from the Western Pacific are softening as processing plants run out of storage and continue to operate at lower-than-usual capacity, Somkiat Threamruktakul, marketing tuna division manager at SeaValue, told IntraFish.

“Companies have stocked up to avoid a shortage once the FAD-free fishing period goes into force in July," he said. "There is no more storage capacity and companies are not buying more even if they want."

Prices are at around $1,700 per metric ton, and are expected to remain between $1,650 and $1,800 per metric ton throughout the year, down from the peak of $2,300 per metric ton seen in 2017.

During the FAD-free fishing season, catches are expected decline by around 30 percent, but a recovery is expected in November.

“Because all plants are full now I don’t think the prices will go up much during the period," Threamruktaku said. "Last year there was some quota allocation transferred to the Eastern Pacific fishing grounds and that drove prices up."

Another factor putting pressure on storage capacity and impeding companies to buy more tuna is the lack of workforce prompted by the implementation of stricter measures to employ foreign labor.

“There was a big part of the workforce that was not registered, and they were sent home to go through the administrative process of registering and applying back for a job in Thailand, so many firms have reduced their processing capacity,” Threamruktakul said.

Around one million workers had to go to their respective countries, and there are still some 300,000 people undergoing the process of registration, according to him.

“I think this issue could be solved by the end of July,” he said.


Tuesday, May 29, 10.00 a.m. ICT

Bangkok welcomes seafood world with Thaifex, tuna conference

The seafood world is meeting this year in Bangkok for both Thailand’s largest food trade show, Thaifex, and the world's largest tuna conference.

Thai seafood exports hit $4.2 billion in 2017, with shrimp making up for $1.2 billion, a sector currently hit by low prices and global oversupply.

IntraFish will bring you the latest news from the show floor. Keep checking back here for all the live updates.


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