While the economy starts to show positive signs, consumers remain reluctant
The US economy is starting to show some signs that the downturn may be slowing, but these positive signs have not yet changed consumers’ perceptions. The Consumer Confidence Index prepared by the Conference Board, which recovered strongly between February and May, fell again in September. This shows that consumers remain uncertain about their current situation, which is not very encouraging for the upcoming Christmas holiday season, when expenditure usually increases and shrimp consumption increases. Although consumers are less concerned than a year ago, they are still saving more and spending less, including in restaurants, where most shrimp consumption takes place. Once the economic recovery is seen to be well underway, an increase in consumption can be expected.
US reviews antidumping duties and a new report raises concern about Thai shrimp
In July, the Department of Commerce published the final results of the third administrative review of the antidumping duties on shrimp. Based on these results, all suppliers from India received duties below 1% for imports between 1 February 2007 and 31 January 2008. Five suppliers from Viet Nam had their duties removed, while several others were given a 4,57% duty and the 25,76% duty was maintained for the remaining companies. In the case of Ecuador, several dozen companies saw their duties reduced from a range of 2 -2,2% to below 1%. Two Chinese companies had their rates cut from 26,3% to 9,08%, while the rate of 112,8% was maintained for other Chinese companies. Several Thai exporters had their duties revised upwards by about 0,2%: specifically Packfood Public Co Ltd was given a 4,61% rate instead of 4,25% and the Rubicon Group rate increased from 4,64% to 4,8%, while the remaining exporters, including Thai Union Frozen Products were given a rate of 4,71% instead of 4,51%. Shrimp importers in the US are now expecting the results of a review process of the International Trade Commission, beginning in January that could possibly revoke the antidumping duties, according to a National Fisheries Institute meeting.
In a report prepared by the US Labour Department, Thai shrimpers were accused of using child and forced labour in their production. Labour conditions in Thailand’s production had already been questioned in a previous report from The Solidarity Center. Thailand has until 10 December to defend its fish production against these allegations. The Thai Frozen Food Association has questioned the results of the report and the information used in its preparation. Also, the president of the Thai Shrimp Association stated that it is imperative that the Thai government work fast towards the clearing of these accusations before the perception of consumers towards Thai products is affected. Yet another concern among Thai exporters is the exchange rate, as the appreciation of the baht is likely to be a barrier for the improvement of exports and also prevents the opening of new markets to diversify the risk. Thai producers expect to have a 5% increase in their production and exports, with the US remaining as the main buyer, accounting for over 50% of total exports.
Imports remained stable during the first half of 2009
In the first half of 2009 US shrimp imports remained almost unchanged in terms of volume, totalling 236 076 tonnes, -0,4% compared with the same period in 2008. In terms of value, imports fell 2,5% to USD 1 612,5 million. The unit value of imports fell 2% in the period reviewed. Thailand remains the top supplier of shrimp to the US market, with 73 367 tonnes worth USD 515,4 million, accounting for 31% of total imported volumes and 32% of total value of imports. The second main supplier is Indonesia, (17% both in volume and value), and Ecuador (14% and 11% respectively). The six top suppliers (the previous three plus Viet Nam, Mexico and China) accounted for 81% of the total supply of imported shrimp in the first half of 2009. Purchases from Mexico grew significantly (+59% in terms of volume and +41% in terms of value), while sales from China continued to fall (-27% and -22% in volume and value respectively). Among the top suppliers, Thailand and China are the only two that showed an increase in terms of unit value, while the other providers showed a reduction of unit value of sales to the US (from 6% in the case of Indonesia to 14% for Vietnamese shrimp).
Headless shell-on frozen shrimp remains the main imported product, with 92 741 tonnes worth USD 620 million, but its share in total imports fell from 42% in the first half of 2008 (both in volume and value) to 39% between January and June 2009. Imports of this category fell 6% in quantity and 11% in value. Ecuador is the main supplier of headless shell-on frozen shrimp, accounting for 28% of total supply in terms of volume, followed by Thailand with an 18% share and Mexico,12,5%.Imports of this product from Ecuador remained almost unchanged in terms of volume (-0,3%), while purchases from Mexico grew significantly (+65%), and Thai sales fell by 15%.
The second main imported product is peeled frozen shrimp, which accounts for 33% of total volume of imports and 34% of total value (78 212 tonnes worth USD 546 million). Imports of this product grew 5% in terms of volume in the period reviewed, while remaining unchanged in terms of value. Unit value fell by 4%. Asian nations dominate the supply of this product; Thailand supplies 28% of total volume, Indonesia 26% and Vietnam 10%. These three nations showed growing sales in the period reviewed and together account for 64% of total supply of peeled frozen shrimp. Purchases of breaded frozen shrimp were 13% lower in terms of volume, and China continued to lose ground in this segment. Chinese sales fell 20% in terms of volume but still provided 58% of total supply in the first semester of 2009. However, purchases from Thailand, which was largely responsible for the growth in this segment, also showed a reduction (-15%). Breaded frozen shrimp showed the highest increase in terms of unit value, +8%.
The upcoming Christmas holiday season, when consumption usually peaks, is having little impact on imports of shrimp. Total imports up to August fell 2% in terms of volume and 5% in terms of value, with a 3% reduction in unit value. This could be interpreted as adequate supply for a demand that is not improving and remains uncertain in the short term.
Domestic supply grew, pushing down prices
Gulf shrimp landings between January and June grew 34%, and up to August, the increase compared with the same period of 2008 is 38%. This growth in the supply of domestic shrimp, added to the stocks carried over from last season, seriously affected prices. In some Gulf States, prices in August fell over 50%. The Governor of Louisiana formed a task force in order to analyze the market situation and prepare measures to aid the shrimp sector, which has been adversely affected by the current market situation and increasing costs. The Executive Director of Wild American Shrimp Inc, representing the domestic industry, requested that measures be taken to distinguish wild shrimp from cultured shrimp so that it can be promoted as a wild-caught product. One of the main obstacles was the financing of such a campaign, as WASI is dependent on contributions of the domestic industry, which is seriously compromised by the current market situation.
Demand is likely to remain stable and moderate for the rest of 2009, until the recovery of the economy is certain and recognised by consumers. As long as consumer confidence is low and consumption remains down, high end products such as shrimp will not show a significant increase in demand. This restriction is already affecting shrimp imports and prices. In the domestic wild-caught shrimp market oversupply and low prices are likely to continue and will remain a challenge unless a distinction is made between domestic supplies and imported cultured shrimp, which sets a precedent for price levels.
Efforts to stimulate consumption are being taken by the National Fisheries Institute. As consumers are eating out less often because of the recession, the industry is trying to attract consumers by providing a website with recipes and suggestions (www.eatshrimp.com) for eating shrimp at home.
Report prepared by INFOPESCA