No big surprises in 2003

Prior to the opening of the mackerel season in August/September 2003, the Norwegian industry in general predicted reduced volumes and lower prices for Norwegian mackerel compared to 2002. It was also expected that the exports from the EU would increase. The statistics from the Norwegian Seafood Export Council confirm this picture.

The total Norwegian mackerel exports amounted to 253 109 tons in 2003, which is 42515 tons lower than in 2002. This reduction was expected due to the 10 per cent reduction in the quotas available to the Norwegian fleet in 2002. The reduction in the total average price from 9.05 NOK per kilo to 8.13 NOK was also largely expected as the 2002 prices were seen “as unrealistically high”.

The EU increased its exports of frozen mackerel in 2003 by 11 per cent to almost 300000 tons. The prices decreased by 10 per cent in € per kilo.

The fishing season stretched over a longer period than normal for the Norwegian vessels.

The Norwegians exporters had a better year than the previous year in terms of exchange rates and interest rates due to a series of cuts in the interest rates by the Norwegian Central bank.

First quarter of 2004

Apparently the landings of mackerel in Ireland dropped dramatically, by at least 50 % in the first months of 2004, due to immediate implementation of an EU control directive by the Irish Government. Intensified controls of the landings in Ireland resulted in higher landings in other UK ports. Official figures are not yet available.

It now appears that level of foreign landings of mackerel in Norway basically will remain at the same level as the first quarter of 2003 at some 37 000 tons.

The first two months of 2004 the Norwegian exports increased by 21 per cent as a result of higher volumes and prices compared to the same period in 2003.

Developments in some key markets

EU exports increased to its biggest market, Nigeria, to Japan and China and to most countries in Central an Eastern Europe, including Russia, Poland and Lithuania. Norway’s exports to its key markets in 2003 were reduced in the case of Japan and Russia while it increased to China and Ukraine. Generally one may divide the markets according to preferences for big mackerel (> 600 g) and smaller mackerel (<600g). In the first group we find Japan, Ukraine and Russia and in the other group for instance Nigeria, Turkey and Romania. Norway has, due to natural conditions, a comparative advantage as regards bigger mackerel and mackerel with a relatively high fat content.

According to import figures from Japan, Japan cut back its total imports of frozen mackerel by 14 per cent in 2003. The imports from the EU sharply increased by 36 per cent while the imports from the main supplier, Norway, was reduced by 20 per cent.

Source: Norwegian Seafood Export Council

However, Japanese imports must be seen in the context of increased imports of mackerel to China from both the EU and Norway. An important share of this mackerel imported to China is processed for exports to Japan.

There is a general impression that the underlying demand for mackerel remains high in Japan. Mackerel has en established position in the Japanese consumption of seafood.

To explain the reduction in prices closer attention must be paid to the relative relationship between the currencies (Yen, €, NOK) and to the structural changes that have taken place in the distribution pattern in Japan over the last years.

Japanese imports were considerably lower in January 2004 compared to January 2003. Most of this reduction was due a sharp decline in the imports from the EU (-66 per cent).

Russia and Ukraine – High expectations for growth

The EU exports of mackerel to Russia, the second biggest EU market for mackerel after Nigeria, also increased by more than 30 per cent in 2003 in terms of volume compared to 2002. The average price dropped by 13 per cent.

Norway had a reduction in the exports to Russia of some 13-14 per cent which corresponds to the increase in Norwegian exports to Ukraine. Prices in NOK for Norwegian mackerel increased towards the end of the season (Jan/Feb 2004) compared to the same period in 2003, reflecting strong demand in Russia and Ukraine. The weaker Norwegian currency strengthens this effect.

Exporters, taking into account the economic growth rate in the two countries, the positive developments in their processing industries, and the fast growing retail sector, believe demand for mackerel will be strong in 2004.

Turkey- Kick start in 2004

A tremendous increase in Norwegian exports took place to Turkey in January and February this year. The 6149 tons exported constitute two thirds of the total Norwegian exports of mackerel to Turkey in 2003. This may indicate that the prices of mackerel now are at such a level that demand will increase from countries with less purchasing power.


What will happen in 2004?

Some key elements are:

• Expectations of strong market demand
• Reduced quotas - TAC down by 46 000 tons
• Indications of low levels of mackerel in storage
• The currency situation. What will happen with the interest rates in the U.S, EU and Norway? Some signals from the Norwegian banking sector indicate that the Norwegian currency is likely not to weaken in the months ahead.