US Frozen Shrimp Imports Decline YoY for First Time in 9 Years

US imports of frozen shrimp (HS Code 030617) declined 7.4% year-over-year (YoY) in value and 10.3% YoY in volume in 2022. This was the first decline in value in three years, while in volume, it was the first decline in nine years. The total import value was $5.62 billion and the volume was 621 thousand mt.

There was a sharp growth in imports during 2021, particularly during the second half of the year, with both value and volumes reaching record highs and rising 28% and 23% YoY, respectively. This was despite there being no decline in imports during 2020, when the Covid-19 pandemic began. Low interest rates and optimism over the lifting of pandemic restrictions boosted importers’ demand. Some of the momentum continued into the early months of 2022. However, by May, imported volume started to decline in annual terms, evidencing that a large glut had been created in the market. Large inventories were reported well into the end of the year. As inflationary pressures started hitting consumers, demand for shrimp started to decline. Consumers’ preferences shifted to cheaper meals.

By December 2022 shrimp and input prices had fallen sharply from their peaks near the middle of the year, and there were no signs that demand was improving. Import volume during that month fell to the lowest level since April 2021, declining 33% YoY, the fastest annual decline since May 2020, when the pandemic was just beginning.

For now, the outlook is uncertain. Growth in global supply will likely continue limiting prices’ upside, which in turn, might begin to lift demand in the upcoming months. Overall inflationary pressure has been mostly easing in recent months. In January 2023, the US inflation rate eased to its slowest pace since October 2021. Imports of frozen shrimp typically fall to the year's low in Q1 of the year, to begin growing again by Q2, and this could be the case this year as well.

Ecuador is set to continue growing its share in the US market.

During 2022, India remained the largest origin for US imports, on a value basis, for frozen shrimp, with 38% of the total market share. However, this represents a shrinkage from 42% in the previous year. Meanwhile, Ecuador remained the second-largest origin, but gained considerable market share, now representing 25% of total US imports from 21% previously.

Ecuador gained market share in detriment of India's as the former had a lower average unitary value, at $7.47/kg in 2022, compared to India's $8.76/kg. In addition, India’s overall shrimp exports declined as a result of lower production, given high input costs.

Ecuador’s lower prices reflect their industry’s high productivity, which is expected to continue. Its relative proximity to the US also provides an advantage against other major market players. Nonetheless, Ecuador’s export prices might be set to rise soon as its government ended a fuel subsidy for the shrimp industry in December 2022.

Source: Tridge and USDA