US Shrimp Imports Resume YoY Growth, but Market Remains Comparatively Quiet
During Aug-23, United States (US) frozen shrimp imports (HS code 030617) managed to rise year-on-year (YoY) for the second consecutive month after experiencing annual declines from Jun-22 to Jun-23. Before that, during H2-2021 to H1-2022, imports were breaking records on expectations of strong consumer demand with the lifting of pandemic restrictions, but demand was likely overestimated, leading to a glut.
This August, import volumes rose 5% YoY to 56.3 thousand metric tons (mt), the largest quantity imported since Jun-22. August’s import volume figures, especially when compared to the last twelve months, support Tridge’s previous expectations that a recovery in this market was on the way. However, the full picture reveals that the market remains considerably quiet.
Firstly, after being above the five-year average all throughout 2023, August’s figures trailed it for the first time in the year, roughly by 3 thousand mt.
Source: USDA, Tridge
Secondly, average import prices plunged to their second-lowest level on record (since at least 2012), at USD 7.77 per kilogram (kg). This level represents a 13% YoY decline and a 9% drop compared to the five-year average for August.
Source: USDA, Tridge
Considering both events, it is fair to say that US demand – while better than the latter part of 2022 – remains relatively quiet. As Tridge mentioned in previous reports, the main reason why prices have plummeted corresponds to ongoing global supply increases. An illustrative example of this phenomenon can be found in Ecuador, the world's leading shrimp exporter. Despite a significant increase in their shrimp exports in August, prices for these exports have dropped to historically low levels. This trend strongly indicates a continuous surge in production. Yet, while moving in the right direction, demand in the US did not react as anticipated to such low prices.
Imports from Vietnam Doing Well
Frozen shrimp imports from Vietnam, which had been performing worse than the average during the Jun-22 to Jun-23 period of annual declines, are now one of the leaders showing YoY gains. During Jul-23 and Aug-23, imports from Vietnam increased by a net 1.04 thousand mt in YoY terms, the second largest one among all exporters.
Vietnam only trailed India, from which imports rose by a net 5.24 thousand mt, but managed to beat Ecuador, Indonesia, and Argentina.
Among major exporters, only Thailand and Mexico experienced a loss from Jul-23 to Aug-23, with the former explained by much higher import prices compared to the average and the latter by disincentivized exports due to an unfavorable exchange rate (super strong Mexican peso). It’s likely that Vietnam, which, in contrast, is facing a depreciated currency, is taking the opportunity to fill Mexico’s decrease in exports.
Moving forward, import volumes are expected to continue rising as they follow their typical seasonal trend. Imports typically peak in October but remain strong all throughout Q4. As Tridge has reported in recent analyses, global shrimp production is highly pressured with current prices, as low margins will eventually translate into cuts. A substantial production decline in Indian production (The US’ largest shrimp supplier) is expected in the upcoming months, which will result in higher prices moving forward.