Shrimp Market Report - March 2007

Market trends

US shrimp imports in 2006 reached a peak level both in volume and value terms. The quantity of imports, in contrast to the value, has continued a positive growth trend, reaching last year 590 200 MT. This level represents a 1.6% increase compared to imports in 2005. Shrimp imports also grew in value terms, reaching US$4 115.3 million in 2006, +13.1% compared with the $3 639 million registered in 2005. This means that the unit value of shrimp imports grew 1.3% in the period under review. In recent years, the unit value of imports has had both negative and positive variations with values fluctuating but with a clear growth trend for volumes, as it can be seen in the graph below.

Thailand has an increasing share of the US market, accounting in 2006 for 33% of volume imports, followed, also with an increasing share, by China with 12%, Indonesia (10%) and Ecuador (10%). Vietnam remains an important provider, but its share is decreasing, from 8% in 2005 to 6% in 2006, due to a reduction in its sales to the US. Also, import share concentration is increasing: in 2005 the five countries previously mentioned represented 66.4% of sales to the US, in 2006 they accumulated 70.7% of imports.

As for the products imported from those countries, the most important Thai product is “other frozen preparations” (36.2%), followed by peeled frozen (27.5%). This second category is also the main imported product from Ecuador, Indonesia and Vietnam, with shares of 20.6%, 47% and 50.7% respectively. From China, 58.3% of imports are of breaded shrimp, followed by other frozen preparations with 25.8%. This product is also the second imported product from Indonesia (13.9%) and Vietnam (20.4%).

During 2006, imports from Thailand grew both in terms of volume and value, 20.4% and 30.3% respectively. Similar results can be observed in imports from Indonesia (+11.6%, +15.1%), China (with strong growth of 50.8% and 61.1%) and Ecuador (+19.7% and +18.9%), always in terms of volume and value. In the case of Ecuador, this growth occurs in line with the recovery of the shrimp industry, after it was seriously affected by white spot decease. Other countries with lower importance for the US market that also had an increase in their sales, in terms of volume and value, include Bangladesh (+22.6% and +38.5%), Malaysia (+18.4%, 17.6%), Peru (+18.6& and 23.1%) and Guatemala (+82.8% and +36.5%). On the other hand, many countries saw a reduction in sales during 2006. Among these countries, it is worth mentioning the case of India and Brazil which were strongly affected by the anti-dumping measures. In the case of Brazil, this country reduced its sales almost 80% in terms of value. Among the most important suppliers, those with the strongest reductions were Vietnam, Venezuela, Honduras and Panama.

WTO

Regarding the US anti-dumping measures, recently the World Trade Organization (WTO) ruled that the US “zeroing” policy (which effectively results in higher estimated dumping margins and thus in higher import duties) is in contravention of international trading norms. Meanwhile, the US Department of Commerce began a third round of review of the measures. At the same time, Ecuador achieved a “victory” on that matter, by taking a claim referring the measures applied to some of its products to a WTO panel. The panel ruled against the US, stating that its actions were inconsistent with the previsions of the Anti-Dumping Agreement, and that it nullified or reduced the benefits that correspond to Ecuador in the frame of this agreement, and according to figures provided by Ecuadorian authorities, caused losses of about U$S 50 000 a day to shrimp producers from this country. Most recently, the Department of Commerce cut the import duty for two Ecuadorian companies by 31%, from 3.26% to 2.25%. That reduction will only apply to the production of those two companies reviewed. The President of the National Aquaculture Chamber stated that Ecuador would continue with its demand against the US until they achieve a zero duty, given that they consider that it has been proved that they are not involved in a dumping practice. In the meantime, Indian producers were preparing to receive the second round of administrative reviews, while, along with Thailand, they presented similar claims to that presented by Ecuador to the WTO.

Main imported products

Excepting some sizes of headless shell-on frozen shrimp and “other preparations” (a category that remained almost stable, with a reduction of 0.8%), volumes of all the other shrimp import categories grew in 2006. the best performance was shown by the “other frozen preparations”, group which grew 39.5% in terms of volume and 43% in terms of value. Another item that had a remarkable increase was “other products”; imports of this item grew 32.4% and 31.7% in terms of volume and value respectively.

As it can be seen in the graphic above, in the recent years the US market is showing a growing trend to turn its preferences towards products with more added value, such as breaded frozen shrimp and meals prepared with shrimp (included in the “other frozen preparations” category) to the detriment of peeled frozen shrimp and headless shell-on frozen, of which volumes grew at a lower pace than global imports.

Headless shell-on frozen: This was the main imported product during 2006. Imported volumes grew 3.2% reaching 255 669 MT worth US$ 1 789 millions, 1.6% higher than the previous year. Consequently, the unit value of headless shell-on frozen shrimp imports in the year under review was 1.5% lower than in 2005. The most imported size was 31/40, with purchases of 45 350 Mt, followed by 26/30 and 41/50 with 34 939 MT and 34 485 MT respectively, and between these three sizes account for 44.9% of headless shell-on imports. The different sizes showed a positive change rate both in the imported volumes as in the values, excepting the 15/20 and 31/40 sizes that showed a negative variation in both categories, and the <15 size that remained almost stable with a small growth in volume and a low reduction in the value. The uneven behaviour of the unit values of the different sizes, with a fall in prices of 15/20 (-3.1%), 21/25 (-4.9%) and of <15 (-0.9%), which together account for more than 40% of the value of imports of headless shell-on, contrasts with other sizes, whose prices show a small growth or remained almost unchanged. The main suppliers of headless shell-on were Thailand with a share of 24.4% of total imported volumes, followed by Ecuador (17.8%) and Mexico (13.1%). Ecuador and Thailand alternate as the first and second suppliers of 41/50, 51/60, 61/70 and >70. Thailand is also the main supplier of 31/40, followed by Indonesia, and of 26/30, followed by Mexico. The latter is the main provider for the bigger sizes, 15/20 and <15, for which it is followed by India and Vietnam respectively. Venezuela also achieves a good position in the smaller sizes, being the third supplier of 51/60, 61/70 and >70, and placing fourth for 41/50 and fifth for 31/40.

Peeled frozen: With 163 286 MT worth US$ 1 209.6 million, this is the second most important imported product. This figures mean that compared with 2005, imports grew 9.9% in terms of quantity and 16% in value. This is also the item which had the highest increase in its unit value, +5.5%. The importance of this product in total imports has been declining in the recent years, and in 2006 meant 27.5% of total shrimp imports. The main suppliers of this product were Thailand, Indonesia and Vietnam, each of one with shares of 32.9%, 17% and 11.6%.

Breaded frozen: imports of these products grew 10.5% and 10.6% in quantity and value, registering in 2006 imports of 49 252 MT worth US$ 236.6 millions. These figures show that the unit value remained almost unchanged in 2006, +0.1%. The origin of breaded frozen shrimp is highly concentrated, 80.7% of the purchases come from China, and 12.6% come from Thailand, for which together account for 93.3%.

Other frozen preparations: This category had the most remarkable growth last year, from 83 590 Mt in 2005 to 116 643 MT (+39.5%), and regarding the imported value, +43%, from US$ 578.9 millions in 2005 to US$ 827.6 million in 2006. The unit value of these products grew 2.5% and their share in total imports went from 15.8% of the imported quantity in 2005 to 19.8% in 2006 and from 15.9% to 20.1% of the imported value. The origin of these imports is also highly concentrated, although less than for breaded frozen shrimp. 60.2% of the trade came from Thailand, 15.1% from China, 7% from Indonesia and 6.5% from Vietnam. So, 88.8% of these products had their origin in Asian countries.

Other products: The driving force of the growth of this group was canned shrimp, with a share of 38% of this category, and which volume grew 36% and value 70.4%.

Domestic supply

Prices for some sizes of Gulf brown shrimp recovered slightly, while other sizes showed again a reduction. For Gulf white shrimp, excepting 21/25 sizes, prices also went down. This implies that after the decreasing price trend during 2006, the price level achieved in February 2006 could not be regained. Causes of this low prices level are due to several factors, among them, the good supply of domestic production during 2006, as well as the abundance of imported products. It is estimated that the total offer in 2006 grew 12%, while the demand grew at a much lower pace, 4% or 5%, which also helps to maintain the low prices. This is forcing companies to compete in terms of quality and value-added products, in order to obtain higher profits. According to available information, landings in the Gulf area in January 2007 were 46.2% lower than in 2006, registering 1 494 MT in the current year and 2778.3 MT in January 2006. Despite the lower captures, prices did not improve, due to the abundant stocks. It is worth remembering that landings in 2006 were relatively higher due to the disruption to activities caused by the damage of hurricane Katrina in 2005.

Recent trends

In the first month of 2007, imports of shrimp to the US showed a new increase both in quantity and value, due mainly to the growth in imports of other frozen preparations and peeled frozen shrimp, while imports of headless shell-on and breaded frozen were lower than in January 2006. Excepting peeled frozen, other preparations and other frozen preparations, all the other product categories showed a reduction in their unit value at the beginning of 2007. The outcome of this uneven behaviour is an almost unchanged unit value of global imports.

Nevertheless, regarding the supply, both domestic and imported, improve after May. Currently US demand is dull and is not managing to absorb all the supply available with the result that prices are unlikely to increase and may even decline. In 2006, the growth rate of supplies (12%) was more than twice higher than the estimated growth rate of consumption (between 4% and 5%). This explains mainly the low prices and most of all, the concern of the entire sector that for the current year the trade can only expect “more of the same”.

By Javier Lopez
© FAO GLOBEFISH 2007