Japan Turns to Cheaper Suppliers for Frozen Shrimp

 In January-February 2023, Japanese imports of frozen shrimp (HS Code 03) totaled 19.3 thousand mt worth JPY 23.6 billion, which represent year-over-year increases of 1.8% and 1.4%, respectively.

The average import price is now falling in year-over-year (YoY) terms, after soaring growth rates through most of 2022.

While global import prices started to decline from their peaks around mid-2022, mainly amid a general slowdown in demand, Japanese import prices have also fallen because Japan is importing more shrimp from origins with cheaper export prices.

These are the trade changes that have happened over the past few years:

Source: Tridge and Japan Trade Statistics

After a blip in 2022, India has regained all lost ground in Japanese imports of frozen shrimp (in volume) and even gained more to surpass Argentina, Thailand, and all other locations together excluding Indonesia, Vietnam, and Ecuador for the first time since at least 2017. Back in that year, for a Jan-Feb period, India had only a 12% of the total share and ranked fourth. As of Jan-Feb 2023, it is now ranked first with a total share of 31%.

In the meantime, Vietnam, which ranked first in Jan-Feb 2017 with a total share of 23%, has mostly continued to lose ground, excluding 2022, when it regained some market share to the detriment of India. Nonetheless, as of Jan-Feb 2023, Vietnam now ranks third, with a total share of 16%.

Indonesia's share has been more consistent over the last three years, but also shed some ground this 2023, holding 19% compared to 21% in 2022. However, it is still mildly higher than its share in 2017, of 18%.

Ecuador is the newest and rising star, holding only 1% in Jan-Feb 2017 and now holds 5% as of Jan-Feb 2023. It now ranks sixth among import origins.

Among other locations, which include Argentina, Thailand, and China, which rank fourth, fifth, and seven, respectively, their share has mostly eroded over the past few years. The same can be said about Myanmar, Bangladesh, and Mexico, which rank eight, ninth, and tenth, respectively.

One of the main reasons behind these changes is that Japanese import prices from Ecuador and India were the cheapest among the top ten locations, at JPY 1,051/kg and JPY 913/kg. In the meantime, prices of shrimp coming from Indonesia, Vietnam, Argentina, and Thailand were at JPY 1,300/kg, JPY 1,571/kg, JPY 1,203/kg, and JPY 1,350/kg.

India’s blip in Jan-Feb 2022 can be attributed to being hit more severely with the supply chain disruptions caused by the pandemic, leading to longer waiting times and costlier freights. However, this ended in H2 2022 and India’s share started recovering. For this early 2023, it retained the price advantage relative to other producing countries, with the exception of Ecuador, which was ranked first in shrimp exports during 2022, surpassing India. Ecuador’s takeover of global shrimp markets is expected to continue, as its growing output and cheaper production costs still give it a competitive edge. Meanwhile, Thailand suffered some production disruptions related to diseases and weather in late 2022. Indonesian production was being directed with a stronger focus on the US, which suffered an oversupplied market in H2 2022 and slowed its imports. There wasn’t enough time to redirect more production to other destinations such as Japan and competing countries took some of its share. This seems to have been the case with Vietnam, as well.

In the upcoming months, Japanese demand could strengthen further with the decline in prices and as consumption grows with the easing of travel restrictions. Demand could be boosted further if average import prices continue their decline. While in February 2023 they were already below 2022 levels, they are still considerably above 2021 levels, so downside room is ample. In addition, as the country re-opened to foreign visitors in late 2022, this might also help to increase demand, particularly during the spring and summer of this year, which is when Japan receives the most visitors. It’s likely that import volume will increase (compared to 2022) from March through July. Nonetheless, this would depend on a stable economic environment and ongoing declines in inflation rates, as there are cheaper seafood and protein alternatives to shrimp. If consumers are hit with a lower purchasing power, they would likely prefer the cheaper alternatives.