Supplies and prices
Salmon prices have weakened somewhat during the last month as supply is plentiful. With lower prices, the larger and more integrated companies are targeting production and distribution as areas for cost improvement as well as a more effective use of the capital employed.
Salmon prices in the European market are slightly weaker, especially for the smaller sizes for which the new generation fish is now available. Big sized salmon are becoming scarce with prices rising.
At current salmon prices, operations are still profitable for most producers, although much less so than during 2010 and early 2011.
The first half-year export statistics from Norway show shipped volumes substantially up by 29%. Exports have been boosted by markedly lower prices compared with the previous year, causing the value of Norway’s exports to fall 6.5% to NOK 14 billion (EUR 1.88 billion).
One positive development in Norway’s salmon industry is the growing share represented by more value-added products. Fillets in particular have been showing good growth during 2012 with export volumes up 17% during the first six months.
Scottish salmon exports during the first quarter were unchanged from the previous year at 21 100 tonnes. The USA remains the largest export destination for fresh salmon from the UK, although the comeback of Chilean supplies has now reduced UK (and Norwegian) shipments to this market. As a result, new focus is given to France, the traditional market for UK salmon exports, with volumes growing 11% as a result during the quarter.
Export volumes from the Faroe Islands were up a massive 64% during the first quarter compared with the same quarter last year. Lower average prices caused total values to increase only by 12%.
The main markets are the UK and the USA, which are both supplied with whole salmon whereas Denmark, Germany and France also take a large part of frozen portions.
The low price of salmon has forced several Chilean companies to suspend planned releases of new equity as investors were not willing to commit at current quotations. One of the companies, Cultivos Marinos de Chiloé has since confirmed take-over talks with Mainstream, a Norwegian controlled company operating in Chile.
The value of Chilean exports of salmon and trout rose 13% in the first six months of 2012 compared with the same period in 2011. The growth was mainly due to increased shipments of Atlantic salmon, which grew by 25% in value, from USD 0.9 billion in the same period in 2011 to USD 1.1 billion this year.
Europe’s main salmon market bounced back during the first quarter as a result of the markedly lower prices compared with the same period during 2011. Norway dominates the fresh whole and fresh fillet categories both of which saw growing volumes during the period.
Over the last decade, Germany has developed into one of the largest and most promising salmon markets in Europe. The high prices registered in 2010 and 2011 dampened demand with lower imports as a result, but that the decline continued during the first quarter of 2012 is surprising.
Japanese salmon imports showed good growth in all product segments during the first quarter. Fresh salmon volumes increased by 40% with Norway dominating the segment. The frozen category is mainly supplied by Chile, which saw volumes grow during early 2012. However, inventory is reportedly high in Japan and buyer interest was much diminished during the second quarter.
The US salmon market registered a turn-around in import volumes during the first quarter after a set-back during 2011. Chile is back as the principle fillet supplier with Norway’s role much diminished. Of note is also the large jump in frozen fillet imports.
Official statistics for the first five months show total import volumes up 21% and values up 2%. Both fresh (+20%) and frozen (+27%) fillets grew strongly, with the fresh product supplied by Chile and the frozen by China.
Salmon prices have rebounded slightly at the beginning of August as supply has fallen thanks to summer closures by producers. Over the next two quarters new market size production will become available from Chile and this should soften any price movement upwards. Demand is still able to absorb available volumes but prices will have to remain low in order to clear supplies.