W2 Shrimp Update: Vietnam's Shrimp Exports Soar in 2023, Indian Shrimp Industry Seizes Opportunities Amid Ecuadorian Security Crisis

Record Vietnamese Shrimp Exports in 2023 and a Cautious Outlook for 2024

The Vietnam Association of Seafood Exporters and Producers (VASEP) estimates that Vietnamese seafood exports for 2023 will reach USD 9.2 billion, achieving 92% of the planned USD 10 billion. Key product groups include shrimp (USD 3.45 billion), Pangasius (USD 1.9 billion), mollusks (USD 0.8 billion), and tuna (USD 0.9 billion). For 2024, the fisheries industry targets a cautious goal with seafood output at 9.22 million metric tons (mmt) and turnover reaching USD 9.5 billion, a modest 3% increase from 2023.

Forecasts for Vietnam's seafood exports in H1 2024 indicate a slight recovery from the low base in 2023, with uncertainties in global market demand due to ongoing economic challenges. However, signals from late 2023 suggest potential recovery in exports to markets like the United States (US), the European Union (EU), and South Korea. Global shrimp supply surged in 2023, causing a demand-supply imbalance, but Rabobank predicts a gradual recovery in demand and shrimp prices in 2024. Notably, Chinese shrimp demand is expected to decrease, potentially leading Ecuadorian exporters to explore alternative markets.

China's squid market faces challenges with an estimated 757 thousand metric tons (mt) of domestic output in 2023 and increasing imports reaching 350 thousand mt in the first nine months of 2023. However, declining domestic consumption in China poses difficulties for traders.

VASEP identifies key trends for 2024, including global economic recovery, geopolitical disruptions affecting trade, continued competition in shrimp markets, improved pangasius inventory situations, and a focus on cheaper seafood product segments. Additionally, the cycle of price decline for many aquatic species may persist until the end of H1 2024, and feed costs remain a major challenge for shrimp farming industries. The slow recovery of demand and the influx of cheap shrimp imports from Ecuador pose difficulties for shrimp exports to the US. Lastly, while the Chinese market demand shows signs of recovery, low prices present challenges for competitiveness.

Indian Shrimp Companies Seize Opportunity Amid Ecuadorian Security Crisis

Ecuador's shrimp, banana, and cacao export industries are facing rising insecurity challenges, leading to significant financial losses and impacting market access. Reports from the Corporation of Ecuadorean Exporter Associations (CORDEX) reveal numerous incidents of assaults, threats, and extortion linked to organized crime, with container contamination further jeopardizing market trust. Notably, drug-related activity has intensified, with a 400% increase in container contamination reported.

These security concerns have forced exporters to adopt costly mitigation measures, including hiring armed guards and investing heavily in private security. This financial burden erodes industry competitiveness and threatens the sustainability of these key sectors vital to Ecuador's export economy. Additionally, container contamination has led to market losses, as international buyers seek to avoid the legal and reputational risks associated with drug-tainted shipments.
In response to global awareness of the violence in Ecuador linked to drug crime gangs, shrimp companies in India have increased their production, anticipating potential disruptions in the supply chain from Ecuadorian counterparts due to a security crisis. A leading producer in the sector increased production by 11% on January 12, 2024, reaching its highest level in nearly two years, resulting in a 26% surge in its shares since the Ecuadorian security crisis came to light. Similarly, other major shrimp producers in India achieved their highest production level since Feb-22, viewing the security crisis in Ecuador as an opportunity.

The surge in Indian fishing companies' shares is noteworthy, marking a departure from their recent underperformance in international markets. This shift is attributed to stagnated shipments to the United States (US), allowing Ecuador to capture a larger market share. With the current political situation in Ecuador and reports of the shrimp industry facing higher taxes, Indian companies perceive an opportunity to capitalize on potential supply shortfalls.