By  Undercurrent News Feb. 21, 2019 10:46 GMT

Undercurrent News industry sources expect strong Chinese demand for shrimp in 2019, even after wholesale price rises slowed in the run-up to Chinese New Year due to plentiful supply from, of all places, Saudi Arabia. However, prices are expected to drop in the short-term.

China imported around 800 containers of Saudi Arabian shrimp in the month prior to Chinese New Year, an importer source based in China told Undercurrent, a volume he described as “beyond expectations”. Only Ecuador supplied more, with 1,500 containers, he reckoned.

The added supply meant Chinese wholesale prices remained “pretty stable” prior to Chinese New Year, he said, the busiest trading period of the year.

We expected prices to rise [before Chinese New Year]. The reason is we didn’t anticipate the shrimp from Saudi Arabia; they came with a lot of volumes,” said the source, who wished to be quoted unnamed.

The source said Chinese demand had slackened since Chinese New Year holidays ended, and some were left with leftover stock. Offer prices from Ecuador have softened.

“I think there is a big problem in that too much large-sized shrimp was imported. I heard many factories have 30-40, 40-50-sized shrimp.” After Spring Festival (and Lantern Festival on Feb. 19) consumption of big sizes is set to “drop quickly”, he said.

However, he said small-sized shrimp is a little short and prices for these sizes “could rise a little”.

He quoted Ecuadorian exporters’ offer prices of $6.40 per kilogram for 30/40-sized shrimp, cost, insurance and freight to China, $5.50/kg for 40/50, $5.30 for 50/60, and $5.00/kg for 60/70. This is down from $7.10/kg, $6.20/kg, $5.70/kg and $5.60/kg respectively quoted by the same source on Jan. 19.

In 2018, China imported a mere 71 metric tons of shrimp directly from Saudi Arabia, according to Chinese customs figures.

But the Middle Eastern country has sent increasing volumes of farmed shrimp to Vietnam, which is then transshipped to China. In 2017, Saudia Arabia exported 32,590t to Vietnam.

“The Chinese government only approved Saudi imports last October, so we didn’t expect such large volumes would arrive quite so fast,” said the source. He noted that only a handful of wholesalers work with Saudi Arabia’s largest shrimp company, National Aquaculture Group, and under strict terms.

Domestic Chinese shrimp prices

Chinese farmgate prices also failed to reach the highs of previous years during Chinese New Year, despite the significant premium domestic shrimp sold live tends to enjoy over frozen shrimp imports.

“China really is importing a lot of shrimp. And so you can only raise prices of live shrimp so high above frozen imports,” a source at a large processor in Guangdong province told Undercurrent.

In Guangdong province, prices for 60 count per kilogram, 80/pc, and 120/pc peaked in late January at CNY 84 per kilogram, CNY 74/kg and CNY 58/kg respectively. They have since dropped, however, with 60/pc already back down to CNY 68/kg this week, according to Undercurrent‘s price dashboard.

The source said more Chinese farmers are producing shrimp in greenhouses, ironing out seasonal changes in production.

“Chinese farmers’ profits were not too good in 2018, because of disease and cold temperatures. But Chinese shrimp demand should remain strong. It is still the number one seafood product in China. The outlook is still good for producers, but we don’t expect big increases in prices.”

China’s direct shrimp imports

Of 13 industry figures in China polled by Undercurrent, four reckon China’s direct shrimp imports will increase by 10-20% in 2019, while another four reckon direct imports will increase by 20-40%. Three reckon direct imports will increase by 60-80%.

In 2018, China directly imported 192,991t of warmwater shrimp worth $1.36 billion, up 203% in volume and 187% in value, according to Chinese customs figures. Direct imports from Ecuador — China’s biggest supplier — totaled 76,081t, worth $480 million.

After Ecuador, China’s biggest direct supplier of shrimp was Argentina, which supplied 37,643t, worth $286m.

The trebling of China’s direct shrimp imports is largely due to the redirection of undocumented shrimp imports from around the world through Vietnam, to direct import channels.

Meanwhile, China imported 45,881t of coldwater shrimp, worth $277m. This was down 2% in volume but up 4% in value compared with 2017. 27,363t came from Canada, worth $154m. Next was Greenland, which supplied 12,386t, worth $77.5m.

China is the world’s largest importer of coldwater shrimp by value.