Chinese buyers have stepped in to pick up the slack in the US shrimp market, where resistance to purchasing and high inventories have some industry members concerned that the market is flooded.

Processors in China are mainly turning to Indian shrimp, as well as products from Vietnam and Indonesia because of the high cost of domestic raw materials, which makes final products unacceptable to export customers.

"It's at least 30-40 percent higher than the Indian price," one Chinese market industry source told IntraFish.

The previously red-hot EU and US shrimp markets are likely to cool down in the second half of the year, and weaker demand in these markets could present challenges for shrimp producers, Rabobank reported last month in its global aquaculture update for the second half of this year.

Demand growth in the US, EU and UK markets is expected to weaken in the second half of this year because of spiraling inflation, which is forcing consumers to cut back on retail and foodservice spending.

The expected slowdown comes at a time when all of these markets have been riding a wave of booming shrimp imports.

US imports of all product types, including warmwater and coldwater shrimp, rose 9 percent in the first six months of 2022, to 441,174 metric tons (973 million pounds), National Oceanic and Atmospheric Administration (NOAA) statistics show.

For one importer of Indian shrimp into the United States, the slowdown is already happening amid poor retail sales and steady foodservice business, although he is expecting prices to remain stable in a balanced market between suppliers and buyers.

"Fortunately China came into the market in the last few months," the importer said.

North Carolina-based importer and processor Seafood Exchange sources shrimp for the US market mostly from Ecuador.

Anecdotal evidence points toward heavy inventories and reduced consumer purchases, the company president Travis Larkin, said.

"I think there is some hope for a 'restart' in consumer purchases as summer ends and families return to more traditional routines, but in the meantime all signs point to a glut of shrimp here," he told IntraFish.

For Illinois-based Fortune Imports President Jeff Goldberg demand continues to be good, while shrimp has maintained itself as a value product. While prices went up somewhat in 2021, he said it is nothing like what happened with other species such as lobster and crab.

Foodservice demand is steady, with people happy to be going out again after the pandemic. Retail, meanwhile, has slowed due to the resumption of foodservice and people decreasing their home cooking, he said.

While noting that inventories are good, Goldberg is reluctant to define it as a glut.

The US market usually finds a way to increase consumption and move product through the supply chain in a reasonable time frame, he said.

"The issue is business was so good in 2021 and the first half of 2022 that retailers and importers didn’t see the slowdown, but [they] will adjust the buying patterns to bring inventories back into line," Goldberg told IntraFish.

Jim Gulkin, managing director at shrimp supplier Siam Canadian, described the current retail market in the United States as a mixed bag.

"Although retail sales in the US have slowed down with many retailers holding high inventories, there are a number of major retailers who continue to purchase to maintain ongoing programs," Gulkin said.

Six weeks or so ago, US buyers were getting better offers for replacement products from overseas, leading them to order more shrimp.

But now, depending on product size and how much stock sellers hold, they are ditching aggressive selling tactics, something that could have an impact on prices as product filters through to the market, one US seafood industry executive said.

"I think we all realize that inventories are pretty high," the executive said.

Looking ahead to the holiday season and beyond the executive remains upbeat about sales prospects. "Overall, I kind of expect shrimp to do fairly well going forward just because it never really went up in price like so many others and, relatively, it's really good value."

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