By Jan. 11, 2018 22:21 GMT

Rock lobster exporters in Australia are gearing up for Chinese New Year — the busiest trading period in the calendar year — with prices relatively firm.

Matt Rutter, general manager of marketing and business development at Geraldton Fishermen’s Co-operative (GFC), told Undercurrent News sales volumes can double over the Chinese festive period, which is characterized by family gatherings and plenty of food and drink. This year the festival falls on Feb. 16.

“We’re just about to head into the Chinese New Year period so it will be interesting to see how things progress from here. Now is when we start to see demand increase.”

GFC, which sells West Australian rock lobster under its well-known Brolos brand, owns about 65% of West Australian rock lobster quota and is the country’s biggest rock lobster exporter. China is by far the firm’s largest market.

“We’re quite fortunate with our fishery because it’s really well-timed with Chinese New Year with the new quota [which starts in January] in.” With all its fishermen set to hit the water next Monday (Jan. 15), supply volumes could go up “quite a bit”, he said.

“We’ll see how prices react,” he added, noting that current beach prices are pretty much in keeping with prices at this time of year (see graph). According to GFC, on Jan. 9 fishermen received an average beach price AUD 60.56/kg ($47.70/kg, with prices varying according to size), virtually identical to prices during the same period in 2017 and 2016,

Average monthly West Australian rock lobster beach prices. Source: Undercurrent News, GFC

Andrew Ferguson, owner of Ferguson Australia – which sells South Australian rock lobster, a different species from West Australian rock lobster — said while his firm also usually sees a hike in sales, this year availability could be tight.

Strong catches and firm prices over the past few months have left the South Australian rock lobster fishery with just 20% of this season’s quota remaining — the fishery’s quota renews to the beginning of July, not January. “I’m worried we’re not going to have enough lobster for Chinese New Year. Demand is outstripping supply.”

“The Chinese market has been very good so far this year. We’ve had a long run of good prices for a month or so, which is unheard of really. Now the market has come off the last few days, which we expected would happen a bit sooner.” Beach prices are currently AUD 80-90/kg, he said, depending on sizes.

Average weekly West Australian rock lobster beach prices. The most recent price peak coincided with National Day and the Mid-Autumn Festival in China in early October. Source: Undercurrent News, GFC

This year prices for West Australian rock lobster have been somewhat volatile, according to Undercurrent‘s price dashboard. In the first six months of 2017, beach prices slumped by half from their previous peak, though they soon picked up again from July; demonstrating the importance of Chinese festivals prices peaked in the run up to National Day and the Mid-Autumn Festival in early October (see graph).

Vietnam trade

Australian customs data shows the majority of rock lobster is still making its way to China via Vietnam, as part of the ‘grey trade’.

From Jan-Oct of last year, Australia exported AUD 554.6m worth of rock lobster (HS Code 030631), with AUD 395.9m worth going to Vietnam, and AUD 116.4m worth to China, according to International Trade Center (ITC).

Each year, Australia exports roughly 8,000 to 9,000 metric tons of rock lobster in total (all species), according to ITC.

“I don’t quite understand why people are still using that route,” said Ferguson, whose firm sells all its rock lobster direct to China. “There seems to be no advantage, not with the FTA [free trade agreement],” he said, noting the reduction in import tariffs.

Rock lobster shipped to China via Vietnam could be disrupted by a recent Chinese crackdown on the grey trade, although uncertainty surrounds to what extent shipments have been affected.

This year tariffs on Australian rock lobster were reduced from 4% to 2% (in 2019 they will hit zero). However, other duties such as VAT of 11% still apply.