US shrimp market: Supply remains high with domestic demand steady and prices low

As a result of the US shrimp tariffs process, heavy volumes of frozen shrimp were imported into the US market during the first quarter of the year. With the consequent build up in domestic stocks, imports were back significantly during the second quarter.

For each month of 2003, US shrimp imports were above those for the corresponding month of the previous year. With traders anticipating the Dept of Commerce decision on tariffs, this trend continued during the first three month of this year. During February, imports were twice the level of February 2003 jumping from 30 000 MT to 60 800 MT.

With high domestic stocks levels, monthly imports have declined since April. The subsequent decision regarding the provisional imposition of tariffs on shrimp imports from six key supplying countries contributed to this decline. During June, imports dropped to just 27.600 MT a 26% decline compared to June 2003. For the second quarter as a whole, volume imports were back 23% compared to the same three months of last year.

Despite the low import volumes during the second quarter (mainly in June), cumulative US shrimp imports for the first half of the year have reached a record high level. During this period, imports totalled 227.000 MT, a 17% increase compared to the first half of 2003. So, even with the second quarter decline, the current supply situation appears to be adequate. In the short term, local inventories should be more than enough to cover domestic demand. This situation could explain in part the relative stability in prices.

In terms of domestic landings, volumes are also down with figures for the first seven months showing a 7% decline to 33.300 MT. This figure is below the previous 5 year average.

Suppliers

Countries benefiting most from the first quarter increase in imports included China and Thailand, followed by Ecuador, Vietnam and India. All five countries were targeted in the antidumping process. During the first quarter, Brazil was the only country among the six under investigation to have had reduced sales compared to the corresponding period of 2003. Other smaller suppliers, such as Indonesia, Honduras, Belize and Venezuela, all of whom were excluded from the antidumping process, increased sales significantly to the US market. However, the Latin American share of US imports was down compared to Asian countries.

During the second quarter of the year, 9 of the top 18 suppliers to the US market, registered a decline compared to the same period of last year. These 9 countries include the 6 nations accused in the antidumping process. During the first quarter Thailand, China, Vietnam and India accounted 70% of total imports, while during the second quarter their share fell to 33%. Despite the drop in imports during the period, Venezuela and Indonesia showed a strong increase compared to the same period of 2003, and also improved their share of the market. Some small suppliers, such as Malaysia, Bangladesh, Surinam, and Peru also increased exports to US market.

Products

All the main products categories benefited from the upward trend in imports during the first half of this year. Among the major import categories, frozen shell-on shrimp increased by 20% to 113 000 MT (during the first quarter the growth rate was 54%). Prices of all categories registered a downward trend compared to the last year (with imports of “other preparations” the only exception).

Categories with the fastest growth were “breaded frozen” and “other preparations” with the former up 45% compared to the previous year. The country with the fastest growth rate was China, which increased exports during the January – June period by 105%. Chinese frozen breaded shrimp is free of duty. During the second quarter, Chinese frozen breaded shrimp, which is free of duty, was the main Chinese shrimp product sold to the USA in terms of volume.

Shell-on

Imports of the smallest and largest counts remained stable and even declined in some cases, compared to the same period of last year. Medium sizes are the most abundant counts, and prices in these grades suffered most from the downward price trend. India, Bangladesh, Thailand and Vietnam dominated the supply of the largest counts while Thailand, Indonesia and Mexico dominated the supply of medium sizes. Meanwhile, in the smallest sizes, the main suppliers were Ecuador, Venezuela Thailand and Brazil, although, the latter lost market share compared to 2003.

The fastest growing categories included “shrimp frozen other preparations” and “others preparations non frozen“. In general, imports of higher added products showed the biggest increases.

In the frozen shell – on category, imports of the smallest and largest counts remained relatively stable compared to 2003 while Imports of the medium sizes registered the biggest increase. On the other hand, import prices for all size categories showed a downward trend with the biggest decline in the medium categories.

Current Market Trends

By the end of August, shrimp prices continued to be low for practically all categories in the US market. The recent tariff decisions do not appear so far to have had the expected impact on prices. Sales in August were slow, and this led to substantial discounts by traders attempting to move product by the end of the month.

At the same time, certain specifications for smaller sizes of frozen shrimp and for processed shrimp are in short supply. Sales for these items are good for traders with supplies. Overseas procurement prices are higher than the selling prices in the US market.

The price gap between shrimp exporting countries and the US market could cause a rather slow inventory replacement. On the other hand, some observers do not expect a further weakness in prices for the fall selling period, although it is certain that shrimp producers will not be too happy if prices continue at current levels.

Martin Leites
© 2004 INFOPESCA

INFOPESCA: Shrimp producers and exporters meet in Montevideo.
The first meeting of Latin American shrimp producers and exporters was held in Montevideo, Uruguay, during August 19-20. The event was proposed by ABCC and organized by INFOPESCA. Representatives from Brazil, Argentina and Peru met at Montevideo. Their original desire was to set the basis for a regional organization. After analysing the market, supply and demand situation, they discussed the possible strategies and there was a consensus on the need to insist the other national chamber to join the initiative. INFOPESCA is organizing a new meeting.