Overview of key markets for fish products from Russian and American Pacific fisheries as per mid-July 2010

Close to mid-July2010 the market received more or less specific reports about purchases of salmon products from main Pacific fisheries, which in combination with a rise of activity of Bristol sockeye fishery could be interpreted as entry of the new season into the main phase, according to the overview prepared by analysts of http://www.megafishnet.com/ based on Japanese, Russian and American sources.

Salmon

On Bristol grounds in the end of the first decade of July the average daily catches of sockeye still remained within 1.5 million fish, but already in the very beginning of the second decade of the month it dramatically approached a very high level of 2 million fish meaning a peak of the spawning run. As per 11 July 2010 the total volume of the seasonal harvest reached 21.5 million fish, only 6 million fish down on last year, when the peak of the season was observed in late June - early July. Pessimistic estimates of the season's outlook quickly changed by more or less optimistic estimates, but the bulk of the Japanese importers still thought that the forecast of 30 million fish would never be reached, which could even more weaken the readiness of the Japanese buyers to speed up talks on conditions of purchases.

As for progressing of the first seasonal shipments of Bristol sockeye from the harvest of 2010 to the Japanese market, on the second week of July the Japanese importers already began offering products from the first lots, the volume of which however was quite small (several containers). The offer prices of first-grade products (headed and gutted) leveled at 680 Yen per kilo of the main count 4-6 pounds (1.8-2.7 kilos) or ca.7.70 USD per kilo, and at the level of 650 Yen per kilo of the count 2-4 pounds (0.9-1.8 kilos) or ca.7.35 USD per kilo. Besides, the products were also offered in 50-pound boxes (22.7 kilos).

According to the market players, the above mentioned prices could hardly be attributed to prices for the bulk of seasonal shipments because talks on shipments' conditions were still far from the end and the Japanese side actively pressed for a decline of prices. The market specialists said that prices for Bristol sockeye even at the level of 600 Yen per kilo (moreover higher than 650 Yen per kilo) were taken by the Japanese users as unaffordably high and the level of prices would be adjusted in accordance with the market conditions.

Along with the above, the first seasonal shipments of Russian sockeye (from fixed seines in East Kamchatka) to Japan were recorded as per mid-July. According to some information, the size structure was still not very good, the shipments were dominated by small-size sockeye (the count SS accounted for more than 30% of the total volume). The offer prices were reported at 600-620 Yen per kilo of products in sight or ca.6.80-7.00 USD per kilo.

As for prices of Russian frozen sockeye (marine driftnet operations), some market players reported that the main sales were at the level of 800 Yen per kilo (ca.9.00 USD per kilo), however some of the products with fairly good size structure were offered at prices well below 800 Yen per kilo.

Pollock

In the end of June and early July 2010 there was a certain slowdown of catch rates on the US grounds of feeding pollock in the Bering Sea, however the weekly result remained at fairly high level again exceeding 40,000 tonnes and amounting to more than 43,500 tonnes. Thanks to the above development the second week running in the current summer-autumn B season the catch volume very seriously exceeded the last year results (correspondingly by 30% and 20%) and as per 3 July 2010 the total volume of the seasonal harvest rose already nearly by 8000 tonnes or 6% on the corresponding result of the B season 2009. The Japanese importers thought that in July 2010 the fishery activity could decline even more, but most probably the catch rates could be still ahead of the last year figures. If the fishermen were able to maintain the weekly harvest at the level of 40,000 tonnes, the season would have to be closed due to complete exhaustion of capture quotas before the end of August (unusually early, as per 3 July the seasonal TAC was covered already at practically 30%). Official closure of the season is scheduled on 1 November 2010.

In the beginning of July 2010 catches were strongly dominated by pollock 400-500g, and pollock of other sizes was not harvested at all. The Japanese said that in the northern areas where main fishing efforts were concentrated the fishermen harvested practically exclusively four-year old pollock of 2006 class. Thus, the above mentioned pollock class could be characterized by strong abundance which could become basic for a catch increase to 1 million tonnes in the recent several years subject to favourable fishery conditions.

As for the output of commodity products, in July 2010 production of surimi and skinned boneless fillets (PBO) has been growing. Already in the first days of July seasonal output of pollock surimi in Alaska already reached the level of 12,000 tonnes, more than 85% up on last year, while the output of PBO fillets, the main article of the US fillet export, rose by more than 40% to 8000 tonnes, while production of deep skinned fillets went down by more than 15% and failed to reach the level of 7000 tonnes. Those indices were greatly influenced by the size structure of the harvest as it was more economically sensible to produce surimi and skinned boneless fillets out of pollock of ca.500g on the average. However, large surimi production could also be attributed to the fact that in the second half of the year forecasters expected higher activity of demand from the Japanese market and other competing markets (South Korea, China, Europe).

Pollock roe

July, just like other summer months, is normally of low interest in terms of trends in production of frozen pollock roe on main grounds, and the current year was no exception, but certain attention was attracted to the situation on the US grounds in the Bering Sea. There, with a 6% rise of seasonal summer harvest the pollock roe production rose by more than 8% and approximated the level of 400 tonnes by early July. Reports coming from the grounds explicitly spoke about absolute domination of young pollock in the harvest, and with such age structure the roe yield is normally at the very low level.

Dynamics of coldstore inventories was estimated by the market specialists as comparably active and the general level of stocks was described as extraordinary low.

Data on approximately five hundred coldstore companies showed that as per the end of the first quarter of the current year, when shipments of frozen Russian and US raw material from the season 2010 began, the total volume of inventories of processed products (mostly salted) at main coldstores amounted to only ca.16,000 tonnes, which was extremely low for the recent 15 years even taking account that due to a switch to a new system of statistic data collection and processing, the sources of primary information considerably declined in number (by 30% namely).

It is worth noticing that primarily published information on dynamics of coldstore inventories in the first quarter of the year showed that as per late March 2010 there were ca.19,000 tonnes of processed pollock roe at coldstores. The figure was corrected only when the April report was published as showing a rise of inventories by only 6.5% or a little more than 1000 tonnes through the month to 17,000 tonnes. In the meantime, the activity of shipments of frozen raw material to Japan peaked observed exactly in April 2010 when imports exceeded 7500 tonnes and such peak in the recent years was practically always accompanied also by fairly quick rise of inventories of processed products.

According to the market specialists, as per late April 2010 inventories at ca.650 coldstores, which in the recent years were covered by statistic reports, amounted to much lower 19,000 tonnes of processed pollock roe (well above 20,000 tonnes are regarded more or less normal for that period of the year). For instance, last year even with comparably slow development of seasonal import of frozen raw (total import from the USA and Russia in April 2009 was limited to only 8000 tonnes versus more than 11,500 tonnes in April 2010) coldstore inventories by the beginning of May amounted to more than 25,000 tonnes of processed products. In the city of Fukuoka, Japan's largest centre of ready pollock roe producers, the inventories amounted to less than 10,000 tonnes (and even less than 9000 tonnes) of processed roe, while in the recent years the usual level was 14,000-16,000 tonnes.

Exclusively low level of turn-of-the-year inventories of processed products was one of the main reasons behind a dramatic rise of activity of Japanese buyers at the current year auctions of frozen Russian raw in Busan. In the first three months of the active phase of seasonal shipments the volume of the Japanese import of Russian products rose by 20% as compared to last year to 15,700 tonnes (taking into account that in the current year the active phase took place from March to May, and last year it happended from April to June).

Another important reason was a dramatic worsening of conditions for purchases of US products, which output and quality level noticeably declined. In the first two months of the active phase of seasonal shipments from the USA (April and May) the Japanese import was limited to only 7800 tonnes, 35% down on last year.

The fact that under such conditions the Japanese buyers succeeded in avoiding a dramatic rise of prices for the Russian raw material could be taken as a big luck for the Japanese side, moreover in terms of quality the Russian products in the current year won much stronger positions than Alaskan products. Strengthening of Yen to USD exchange rate in combination with increased supply of the Russian raw by 20-25% enabled the Japanese side even to improve price conditions of purchases. More specifically, according to official import figures, in March 2010 (the first month of active phase of seasonal import) the average import price of frozen Russian pollock roe brought to Japan turned out to be below 700 Yen per kilo versus more than 1000 Yen per kilo in April 2009 (the first month of active phase of seasonal import in the year 2009). In April 2010 it jumped to the level of 800 Yen per kilo, but in May 2009 it was higher by 13-14% and amounted to 915 Yen per kilo, while in May 2010 it somewhat increased to nearly 830 Yen per kilo (or ca.9.00 USD per kilo according to the average exchange rate through the month), which was noticeably higher than only 750 Yen per kilo in June 2009.

The average import price through March-May 2010 amounted to only ca.805 Yen per kilo, ca.7% down on the average price in April-June 2009 (active phase of seasonal import in 2009). Most evidently, strengthening of Yen to USD exchange rate greatly improved price conditions for shipments of the Russian raw fish and the Russian side managed to avoid a decline of USD prices which was the largest concern of the producers before the start of the current season.

For the Japanese side it was especially important to provide favourable price conditions for shipments of the raw material from the new season because only a low level of prices for ready-to-eat products sometimes remained the core factor in maintaining sales dynamics.

In May 2010 even with a certain decrease of prices for ready products with spices from 1600 Yen per kilo (17.20 USD per kilo under May exchange rate) the volume of such sales in Japan slightly declined, though remaining comparably high at 200 tonnes. In general, in the first five months of the current year, despite a drop of the average sales price by more than 21% on last year to less than 1500 Yen per kilo, it grew by ca.18% to 1000 tonnes.

At the same time, the volume of sales of salted products (more traditional for the Japanese market) went down by more than 12% to 950 tonnes. The average price for the period of five months of the year 2010 remained practically at the last year level, namely at a little less than 1600 Yen per kilo (actually thanks to the bulk of sellers in May 2009 wished to sell off their old stock at extremely low prices). At the same time, in May 2010 the average indications were more than 9% down on the last year result and actually declined much below 1500 Yen per kilo (16.15 USD per kilo). The sales volume also through the month also declined by 10% and failed to reach 200 tonnes.

On the wholesale fish market of Sapporo (Hokkaido) in May 2010 prices for salted pollock roe were practically 15% down on last year on the average (the average sales price amounted to 1630 Yen per kilo or ca.17.50 USD per kilo), while the volume of shipments grew by a little less than 14% on last year to 100 tonnes. The average price indications through the period of the first five months came down by 14% to below 1700 Yen per kilo, while the sales volume grew by 15% to ca.450 tonnes. Prices for frozen raw material in January-May 2010 declined nearly by 25% (the average sales price as per late May 2010 amounted to only 1225 Yen per kilo), but shipments went down practically by 40% to below 700 tonnes. On the market of Seday (northeast of Honshu) the average prices for salted roe for the period of five months descended by more than 20% on last year, and shipments grew nearly by 35% to 400 tonnes.

Many market specialists think that in such a difficult market situation many Japanese producers of ready-to-eat products and suppliers of imported products could hardly think of switching to higher prices. The most sensible position was to maintain prices at the current level, though that could turn into a certain challenge as retail chains continued pressing on sales at lower prices in order to encourage the demand.

Bottomfish prices

On the Japanese market fairly strong attention in the recent months was attracted to the situation with shipments and sales of the Japanese products harvested in the waters of the Emperor Ridge (open waters of the Pacific Ocean to the south of the Aleut Islands). In the current year 2010 the market specialists noticed a considerable improvement both on the fishing grounds and sales of bigspine boarfish and splendid alfonsino, main commercial species in the area. Shipments of the above fish for auction sales grew a more often practice, but prices remained fairly high. While by the end of spring they went down, already in late June prices started recovering and in early July they showed a new rise.

In the end of the first decade of July 2010 in Isinomaki (northeast of Honshu) some 160 tonnes of frozen bigspine boarfish and ca.20 tonnes of frozen splendid alfonsino were put up for auction. Winners' prices of bigspine boarfish recovered to 460 Yen per kilo (ca.5.20 USD) for main counts (40-50 fish per 19-20-kilo box), while the supply of larger count of 60 fish was very limited and prices therefore reached 470 Yen per kilo. In general, the price level rose by 5-10% as compared to previous auction sales in the beginning of the closing ten days of June 2010. The market specialists said that more serious buyers such as comparably large processors also started purchases and they acted both with respect to coming seasonal demand and emerging decline of shipments' activity and figuring on a gradual increase of popularity of the species not only among local consumers.

Prices of splendid alfonsino also looked fairly strong in the recent weeks, and in the course of the given auction the count 70 fish per kilo was sold at prices of about 400 Yen per kilo (ca.4.50 USD per kilo), and prices of the count 60 reached the level of 650 Yen per kilo (7.30 USD per kilo) and approximated 700 Yen per kilo.

The market specialists paid attention to the fact that prices for the Japanese products strengthened at the start of the new season of the Pacific toothfish fishery on the US grounds (in July 2010). Markets of those products partly coincide and in the current year 2010 the capture quotas for the US operations were considerably increased (by 8% to nearly 36,000 tonnes for the Aleut Islands and the Bay of Alaska) and by the end of June the harvest was more than 2000 tonnes higher than last year and reached 8000 tonnes.

In the meantime, many market specialists are sure that shipments of Alaskan products to Japan in the current year may greatly rise as compared to last year, when export from the USA was limited to 3000 tonnes, while shipments to China exceeded the above level more than two times, reaching 6200 tonnes (the total export to all directions amounted to 10,500 tonnes). Those forecasts relied on the conclusions that the outlook for sales of toothfish processed by the Chinese plants grew dramatically complicated after worsening of the situation with the workforce which happened after a large series of industrials' actions towards higher pay.

Brisker dynamics of Alaskan toothfish supply for the Japanese market could give opportunity to the Japanese importers to push down the level of purchase prices. However, there was a similar situation when the Japanese importers tried to push down prices for Icelandic ocean perch against the background of a large rise of catches in the course of the first fishing trip, but such attempts failed and they still had to continue purchasing at prices of about 360 Yen per kilo (CAF, Japan, 300-500g fish) or above 4 USD per kilo. In its turn, that made the importers raise their offer prices to higher than 400 Yen per kilo. Users were overcautious and did not dare active purchases at such prices, but there were no signs of real grounds for price decreases, moreover offers of the Russian producers still remained fairly limited.