Shrimp prices in China hit a record low in 8 years, but expects a slight recovery for the Chinese New Year

In 2019, China had become the world leader in shrimps imports with 718 thousand MT, but the disruptions caused by the COVID-19, the scare caused by traces of coronavirus in frozen seafood packagings found in shrimp from Ecuador in July and November, and from India in November, and also in frozen crabs from Chile in November and several other cases have made the demand on seafood and prices to plummet. Up to October, the YoY Chinese import value and volume of warm water shrimps had a decrease of 11% and 6% respectively.

Ecuador hit by exports drops

Ecuador and India are the two main suppliers of shrimp to China and were responsible for two-thirds of their imports in 2019 and they were greatly affected by their drop in demand in 2020. Ecuadorian shrimp exports to China represented 77% in 2019, and 65% in 2020 so far, which makes the Ecuadorian shrimp too dependent on the Chinese market. The detection of coronavirus in outer packagings of frozen shrimp caused a halt in exports to China. Since then the countries entered into sanitary agreements to prevent such occurrences and the exports have picked up and dropped again but it will likely finish the year with around a 7% increase in volume exported, which is less than half of the usual 20% annual increase Ecuadorian shrimp segment was used to see. But due to the drop in prices, the export value shall be around the same as last year. According to the National Chamber of Aquiculture of Ecuador (CNA), the segment is looking into diversifying their buyers in 2021 so there is a smaller dependency in only one market, which is the case for the Vietnamese shrimps that are exported also to the US, Japan, South Korea and to the EU and they had a much smaller drop in prices for this reason.

Source: STIP, Rabobank, 2020

Source: Undercurrent

Indian production to decrease less than expected

Indian summer production was greatly affected by a labor shortage and input shortages that were imported. 90% of the production is directed to exports and with disruptions in logistics, the producers faced many losses due to processing, transport, and export limitations. The uncertainties made the producers very cautious for the winter crop, and their response was to reduce production volumes in their ponds. The reduction initially was thought to be up to 26% in volume compared to the previous year, but recent surveys point to a smaller reduction of 10-15%. The Rabobank forecasts a world reduction of production by 10.5% for 2020 and a recovery in 2021 by 8.4%.

Source: Rabobank

Chinese Vannamei Farmgate prices hit an 8 year low

The low prices for the shrimps are also faced by the producers of Vannamei in China, mainly located in the Guangdong region. The farmgate prices hit 8-year lows of up to 30% in summer compared to the previous year and showed a recovery in September and October to a drop of up to 15% in November. The shrimps were sold for CNY 47 (-12%), CNY 40 (-14%), CNY 29 (-15%) on the 60, 80, and 120 pieces per kg respectively. The drop in prices is due to the scare of coronavirus in seafood, and even with a drop in imports, prices are still below previous years.

Preparations for the Chinese New Year

Shrimps are one of the delicacies very much appreciated by the Chinese in the celebrations of the Chinese New Year which will occur on February 12th of 2021. The traders start preparing for the shipping to supply this massive demand at the end of the previous year so there is enough time for the shrimps to arrive on time for the feast. The holiday in mainland China lasts for 7 days starting from New Years’ eve. Usually, the prices for shrimps start increasing by this time of the year but instead the prices achieved their lowest in 8 years due to oversupply and decrease in demand. Producers expect a slight recovery of prices in January for the Chinese New Year festivities and China’s Spring Festival but nothing compared to near double the pricing from previous years.

Sources:

AquacultureAlliance.Ecuador's shrimp industry clearing numerous hurdles in 2020.

Hellenic Shipping News. "Dip in demand from China fewer containers hit seafood exports".

Undercurrent. "Rabobank 2020 farmed shrimp output drop may be less than expected".

Undercurrent. "Local supply covid scares complicate China shrimp import recovery".

Undercurrent. "Trade insights 100,000 t cut from China shrimp imports since COVID-19 scare".

Vistazo. "Reducir costos y diversificar el mercado dos reto para el sector acuicola este 2021".