South Korea becomes Russia's Leading Market for Seafood Exports

Seafood

Russia

South Korea

Published Jan 21, 2022

In the wake of a massive drop in Russia’s seafood exports to China, Russian seafood and fish products have effectively allocated their export volume to other Asian and European markets. In 2021, Russia’s exported seafood volume decreased by 16% YoY due to the sharp fall in exports to China from trade protocols disputes. However, despite the volume decrease, Russia is forecasted to increase its export revenue by 20% YoY, mainly driven by higher value-added and processed seafood products returns. In addition, the Russian government’s effort to diversify and widen its seafood market has significantly contributed to the expected value increase. As a result, South Korea became Russia’s top export destination in 2021, with Russian imports witnessing an impressive 49% YoY increase in volume.

According to Rosselkhoznadzor (Russian Federal Service for Veterinary and Phytosanitary Surveillance), by the end of 2021, Russia substantially increased its fish and seafood export volume to an extensive list of countries in Asia, Europe, and Africa, reaching 62 countries. South Korea and Japan were two of the main markets with notable YoY volume growth of 93% and 49%, respectively. Besides Asia, fish and seafood exports to European countries have increased significantly in all main markets. Norway, Germany, Poland, and France have doubled their imports from Russia, and all other European countries have substantially increased fish and seafood imports from Russia. Furthermore, African countries like Nigeria have also become a relevant market to Russian exports.

Chinese Market Collapse called for Market Diversification

Since 2013, China has served as the primary destination for Russian seafood exports. By 2020, Russian exports to China accounted for more than 1M mt of seafood worth USD 1.8B, representing 30% of Russia’s total exports. However, exports to China were already showing a downward trend in 2020, as the exported volume fell by 16% from the previous year due to Chinese customs constraints derived from the COVID-19 pandemic. Furthermore, by the end of the year, Russia’s trade relationship with China was severely damaged when China tightened its control protocols on imported seafood after Chinese authorities claimed traces of COVID-19 found on the packing of imported seafood products.

Source: Tridge, ITC Trade Map

After the control applications, by the first semester of 2021, Russian seafood exports to China fell by 83% YoY in volume and 50% in revenue by shipping 160K mt worth USD 442 million. By the end of September, the volume shipped to China totaled 214K mt, which represented a fall of 72% YoY. As a result, the Russian government called for efforts to diversify and widen their seafood export market while at the same time enhancing domestic demand for Russian-caught seafood in order to avoid a potential drop in fish prices from the oversupply caused by the Chinese collapse.

The strategic market diversification was a successful move from Russian seafood exporters as they were able to strengthen new and existing markets, mainly for Pollock, Russia’s most exported seafood product. According to Russia’s federal statistics service, in 2021, the volume of exported pollock to China fell by 114%. However, pollock still represents the most shipped seafood product as South Korea has reportedly taken 70% of the total exported volume by Russia in 2021.

South Korean Market Climbs Up to the Top

With China no longer being the top export destination for Russian seafood exports, South Korea has claimed the top position as the primary destination in 2021. Shipments to South Korea went from 627K mt in 2020 to 935.2K mt in 2021, an increase of 49% YoY. Furthermore, South Korea took most of the export share from Russia on some of the primary seafood products. For example, South Korea took 70% of the total pollock exported, and in the case of salmon, it took 44%. According to Russia’s federal statistics service, in Oct-21, Korea imported 749.6K mt of seafood from Russia, up 72% YoY, and is now the largest importer of Russian seafood.

Source: ITC Trade Map, Rosselkhoznadzor

Although the increase in Russian imports from South Korea in 2021 is partly due to reduced Chinese shipments, the seafood trade with South Korea has continuously grown over the past years. During the 2016-2020 period, South Korea has had a 7% yearly growth rate on its Russian seafood imports and an 8% YoY value growth in 2020. It is still unclear the YoY growth value that the 49% increase in volume will represent, but it will likely exceed the export value recorded with China and Japan. It is also unclear to what extent the increase in Korean imports results from a growing domestic consumption in the country or is mainly attributed to the reallocation of shipments away from Chinese ports.

Substantial Growth in Other Markets

Besides the 2021 growth in Asian markets driven mainly by the Japanese and South Korean markets, the volume of Russian fish and seafood exports to other European markets has also increased significantly as a result of the market diversification strategy that Russian exporters have undertaken. Exports to Norway increased by 127% YoY from 8K mt to 18.2K mt, exports to Poland by 123% from 3.9K mt to 8.7K mt, exports to France by 100% from 4.3K mt to 9.1K mt, and by 100% to Portugal as well, from 1.4K mt to 3K mt. Other European countries with significant YoY growth were the UK with 42%, Spain with a 24% increase, and the Netherlands, which remained consistently high in 2021, went from 116K mt to 120K mt.

Despite the fall in Chinese exports, China closed the year as the third buyer of Russian seafood with an approximate 304K mt, still representing a significant market. It has been reported that Russian authorities are working with their Chinese counterparts to reestablish phytosanitary protocols for Russian seafood, which aims to recover the market by 2022. If so, Russian seafood might be looking at a very promising year ahead concerning its seafood sales.

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