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Only way is up for pollock prices in 2019 By Tom Seaman Nov. 19, 2018 09:35 GMT
来源: | 作者:By Tom Seaman | 发布时间: 2019-01-22 | 7740 次浏览 | 分享到:

Only way is up for pollock prices in 2019

By Tom Seaman Nov. 19, 2018 09:35 GMT
Russian Fishery Company Russian pollock

The prices for all forms of pollock look set to continue to increase next year, sources in the US, Russia, China and Europe told Undercurrent News.

Prices for pin-bone out (PBO) blocks, double-frozen fillet blocks, and the headed and gutted (H&G) raw material the latter is based on, all look set for higher levels in 2019, having already firmed in 2018, the sources said.

During the China Fisheries & Seafood Expo, held Nov. 7-9 in a venue close to Qingdao, ex-warehouse prices of around $3,500 per-metric-ton were being discussed for PBO blocks for A season. Prices for B season of 2018 were done around $3,350/t. Also, double frozen fillet block prices of around $3,200/t are also being discussed for next year.

“We see the price of $3,500/t reached and confirmed and we will take it up from there,” Fedor Kirsanov, CEO of Russian Fishery Company (RFC), told Undercurrent at the show, of the situation with PBO. US suppliers and also a large European buyer confirmed this level.

The level in the A season of 2018 was around $3,000/t (see image below and use the Undercurrent prices portal for interactive data), a leap from the very low level of around $2,350/t hit in the B season of 2017, as the price bottomed out. The pace of the increase has shocked buyers, but producers have been quick to point out this is only a return to a historical norm

"We felt the fall was pretty quick. Now, it’s going more back to normal. It’s also not like pollock has gone off the charts. It’s back to a level where everyone can make money. It’s going back to a level where producers can make investments," Tom Enlow, CEO of UniSea -- a pollock, cod and crab processing plant in Dutch Harbor, Alaska, which is owned by Japan's Nippon Suisan Kaisha (Nissui) -- told Undercurrent.  

The speed of the price increase has been driven by new markets taking the fish, he said. 

"When the prices were very low, the producers looked at new markets. There has been more focus on deepskin for Asia and also surimi. Demand for surimi has been very strong, due to the shortfall in warmwater surimi," the Nissui executive said. "The shortage in warmwater is the reason Thailand is so hot at the moment for surimi. Also, Japan is stable, but they take almost half of the surimi the US produces."

H&G prices set firm, says Russian Fishery 

Meanwhile, for Russian H&G, prices have risen to around $1,550-$1,560/t (see image below and use the Undercurrent prices portal for interactive data) for the small volumes available at the end of the year, for 25cm fish. However, the expectation is prices will not dive at the start of the year, and will remain firmer next year.

“The current H&G number is $1,560/t, but there is no volume on the market. For next year, we see the price being somewhere between $1,400-$1,500. The price will be stable, but on a high level,” Kirsanov told Undercurrent.

“We also have a different outlook for production for our company, we won’t produce any H&G in B season. We have another plan in mind. The result of that plan will be we don’t do any H&G in B season. So, there will be even less fish in B season,” he said.

“If someone wants H&G in the fall, they have to buy in season A. This is when the price usually comes down, but it won’t next year, as there will be less H&G available,” Kirsanov said.

“I don’t think the H&G price is going to drop as steeply as people think. The Russians have firm contracts on single frozen and H&G production is down. They don’t need to flood the market with loads of H&G,” an executive with a US supplier, who asked not to be quoted by name, told Undercurrent.

The higher PBO and H&G prices then mean Chinese processors and Russian H&G suppliers are expecting a better return for double-frozen fillet blocks.

Double-frozen blocks from China were around $2,750/t this year, but a level of $3,200/t is expected for 2019.

“We see it as starting at $3,200 next year,” said Kirsanov, as RFC enters the contract processing business in China, supplying the H&G and selling the double frozen fillets.

“To mention the Chinese industry, it’s not in the best shape. We see consolidation, but it’s not healthy consolidation, it’s people going bankrupt,” he said.

“The retailers and the EU customers were putting too much pressure on the processors who don’t have good working capital, so they go bankrupt. That results in less capacity available,” said Kirsanov.

“So, there will be two things happening, consolidation and less capacity that will lead to higher processing costs. Then, there will be a social tax applied in China next year. It will lead to a double frozen increase,” he said.

The consolidation of pollock processing in China is continuing, with Qingdao Starfish Co taking over the factory of a rival and another firm also planning not to open after the country’s New Year celebration, sources told Undercurrent.

Russian Fishery Company Russian pollock

The social tax change was confirmed by several other sources. According to Chinese processors, it means the tax will be paid centrally to the government. Previously, the tax was supposed to be paid in the province the migrant worker came from, which meant compliance was very low, several sources told Undercurrent.

Also, the access to workers in China is getting worse, multiple sources said.

“The worry is the worker situation. Everyone is worried about that. It gets worse every year,” said another source with a supplier, who asked not to be quoted by name.

Consumer market

The main consumer market for pollock is Germany, where the two main branded players, Nomad Foods’ Iglo and Frosta Aktiengesellschaft, are increasing prices for branded fish fingers and breaded "schlemmerfilets", as the price for raw material increases. 

Felix Ahlers CEO of Frosta, said the situation with raw material prices is “more or less” as Kirasov and Undercurrent’s other sources described.

“Most importantly, the price increases are just now reaching the consumer and we can judge the consumer reaction only in about six months from now,” he told Undercurrent.

Iglo is going from a recommended price of €2.99 for 450-gram packs of fish fingers and 360g schlemmerfilets to €3.39 from Jan. 1. The big brands agree on a contract price with the retailers and a higher recommended sales price, which the retailer is free to use or not. 

Frosta is going from €2.90 to €3.30-€3.40 for branded fish fingers and schlemmerfilets, Ahlers told Undercurrent, during the Groundfish Forum, held this year in London in October. The company has also launched a range of fish fingers and frozen fish products using saithe, which is still good value compared to cod, haddock, and pollock, he said.

In addition, tenders for German retail giant Aldi have closed in the past few weeks. However, it’s not clear at what price level Aldi Sud and Aldi Nord – the two giant discounter retailers which jointly negotiate with suppliers -- will come out with for Jan. 1, sources told Undercurrent. The current price is €1.59 for a 450-gram fish finger box and a 360g one of schlemmerfilets. 

US, Russian fillet volumes up 

The strong demand and prices have come as production of surimi and blocks has been strong. The US has produced 206,300t of surimi in 2018, down slightly from 207,300t in 2017, according to the latest data from the National Oceanic and Atmospheric Administration (NOAA). However, this is more than double the level produced back in 2010. 

Both the US and Russians have also increased their block production. US PBO production is up 8% year-on-year, to 118,700t, with deepskin production at 56,700t, down 3% y-o-y, according to the NOAA data.

In Russia, PBO production is 58,000t in 2018, up 35% y-o-y, according to data from TINRO, the largest scientific fishery research center in Russia.

Russia has also produced 14,000t of pin-bone in fillets, up 75% y-o-y; 15,000t of mince, up 50% y-o-y; and 3,000t of fillets, also up 50% y-o-y. The total Russian fillet and mince block production is 91,000t, up 44% y-o-y. Overall, the US total is flat at 200,000t, due to a 23% drop in mince production to 21,400t and a 3% decline in PBI output, to 3,800t. 

The US product mix is unlikely to shift dramatically in the next few years, but Russia's will, as RFC and others invest in new vessels and plants, as part of the country's investment quotas program. 

At a conference before the China show, Alexey Buglak, vice-president of the Russian Pollock Cachers Association, modeled the Russian output of blocks, fillets and mince are likely to almost triple by 2025, to 224,000t. This will see H&G production come down from 610,000t in 2018 to 388,000t in 2025, with whole round going from 270,000t to 150,000t in the same period, said Buglak.

Supply outlook 

With the US pollock total allowable catch (TAC) to be recommended in December, as the Pacific Fishery Management Council (PFMC) meets in Anchorage, Alaska, from Dec. 3-11, the Russian TAC has already come out. 

Last week, Undercurrent revealed the country's government approved a marginal increase in the 2019 pollock TAC, but made a slight reduction in the Sea of Okhotsk (SSO) portion of the fishery.

Russian vessels will have a TAC of 1.786m metric tons in 2019, up from 1.781m in 2018, the PCA's Buglak told Undercurrent

For the SOO portion of the fishery, which has Marine Stewardship Council (MSC) certification, the total TAC for 2019 is 964,000t, down from 966,000t in 2018.

The approved figures for the different portions of the fishery can be seen below. The SOO is made up of three subzones: the Northern Sea of Okhotsk, West Kamchatka, and Kamchatka-Kuril, Buglak told Undercurrent

The forecast, however, is also for the TAC to come down from 2020-2025. 

By 2021, the SOO TAC will be down around 100,000t compared with 2018, Buglak said. He also presented the figures you can see below at the Groundfish Forum, held in October in London. Kirsanov, CEO of RFC, also gave a presentation at the London forum, which modeled for a significant drop in the TAC over the next few years. 

This means the PCA is looking again at getting other parts of the fishery MSC certified.

According to Buglak, the PCA has decided to review other candidate fisheries to proceed with MSC certification again, after dropping these plans a few years ago.

“A decision will be made in 2018. This work, if the membership decides, will start in 2019,” he told Undercurrent, on the sidelines of the China forum. 

“[Having more MSC fish] is more important for us, as the industry has entered a new era of development with the so-called development quotas,” he said.

This comes as the Russian industry shifts from a focus on "quantity to quality", to quote Kirsanov, CEO of RFC.

In early October, Undercurrent reported data released by the NPFMC indicated initial estimates of the pollock biomass in US waters could be down significantly this year though it's too early to tell for certain. 

A smaller US biomass could pave the way for eventual cuts to the species' TAC in. However, several rounds of review and consideration of the scientific data have to take place before then, sources said. 

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