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21 March 2012

Alaska Pollock price riddle?

What to expect from Alaska Pollock?

Despite many experts’ opinion that the riddle of Alaska pollock price spread will be resolved during the recent seafood show in Boston, it was not. Participants of the show could see increase of H&G prices from Russia while US producers offered their fillet at lower prices.

At the moment Alaska pollock from US companies is cheaper for European buyers than ever before. According to some sources I communicated with, some US companies offer prices of around $3,150 (€2,408), and even as low as $3,100 (€2,370) per metric ton. But most buyers don’t hurry to accept even these offers, what can be accounted for their hopes for even lower prices.

On the other side, Russian fishing companies increased prices for headed-and-gutted (H&G) Alaska pollock, and now sell it at a rate over $1,400 (€1,070) per metric ton. And, despite constantly growing labor costs and just as constantly diminishing European market, Chinese plants (main consumers of pollock from Russia), still buy it. I assume that the demand is based on a simple theory: Chinese processors have no other choice but stopping their plants if they decline to buy Russia originated fish.

According to a source from China, similarly to the stock market, ‘buying’ itself makes a ‘bubble’ even when catches are good, and this process can keep on till processors are no longer able to hold the production cost on an acceptable level.

Some sources also called actual factors that contradict the fact that the pollock becomes more expensive. “Firstly, the single-frozen block price is going down. Secondly, not many Chinese plants buy the new season's fish, and sales of twice-frozen products are very low. Thirdly, catching is good in Russia,” they say.
Even though the Chinese are trying to sell their double frozen blocks, the source from China said the demand for their production is low and it is very unlikely the Chinese plants will be able to get higher prices.

Lars Nielsen, production director with Royal Greenland, one of Europe’s largest block buyers, has a different view on the situation, but he agrees that the pricing picture “doesn’t fit.” (source: Intrafish)
He believes that it’s Chinese producers who drive H&G prices in order to secure raw material for their workers. However, he is also confident that they buy small batches, and prices in the market are formed on a base of small ‘real sale’ and inventory in China. Lars Nielsen said that H&G are driven by empty factory demand, and MSC by market demand.

One way or another, my opinion is as follows: “I thought Boston would be the deal breaker for Alaska pollock block orders, but it turned out as a social event”. Let’s see what happens in Brussels

Posted on 12:43 PM | with 0 comments
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