Chinese shrimp imports may surpass 1 million metric tons (MT) this year, defying global purchasing trends and achieving growth that no other market has gotten close to reaching in 2023, according to Shrimp Insights Founder Willem van der Pijl.
Between the second half of 2022 and June of this year, China imported around 1 million MT of shrimp, split nearly evenly through every six months. This statistic, combined with the fact that the country’s import volume only contracted 3 percent year over year in July, has led van der Pijl to conclude that China “may, for the first time, surpass 1 million MT of imported shrimp in 2023,” he wrote in a blog post.
China’s shrimp imports totaled USD 2.8 billion (EUR 2.6 billion) by value in the first six months of 2023, up 30 percent from the same period last year. This was partly due to continually plummeting global shrimp prices, of which “it’s still unclear whether the bottom has been reached,” van der Pijl said.
In recent years, India has been steadily increasing its shrimp exports to China, but imports from India in the first half of 2023 appeared to slightly lag behind those of the same period in 2022.
Ecuador has also played a pivotal role in driving China's shrimp import growth; in 2022, Ecuador’s shrimp shipments to China approached the 600,000 MT mark. If the trend continues, Ecuador’s 2023 exports to China could potentially surge to 900,000 MT.
Argentina exported as much shrimp to China in the first half of this year as it did in all of 2022. Van der Pijl projects the country may return this year to its 2019 to 2020 export volumes to China, which hovered between 25,000 and 35,000 MT. If it reaches those marks, it would become China’s third-largest shrimp supplier behind Ecuador and India, respectively.
This all comes at a time when the global shrimp industry is facing a troubling combination of falling prices and reduced demand, exacerbated by escalating feed and production expenses, making the steadiness in Chinese demand all the more important to the sector, according Rabobank Senior Global Specialist of Seafood Gorjan Nikolik said the combination of weak demand, higher costs, and a supply glut are creating a crisis for the industry that may worsen in the latter half of 2023, even if Chinese demand remains stable.
Meanwhile, sales into other key shrimp markets, including the U.S., the E.U., and Japan, have declined in the first six months of 2023. U.S. imports have experienced the most significant drop of all major shrimp markets, though sales grew in July.
U.S. importers have been forced into a hard pivot as they shifted from feeding surging demand coming out of the Covid pandemic to declining demand due to inflation. They faced a choice: raise prices in the face of declining demand or absorb losses on expensive inventory before replenishing at a lower cost, according to van der Pijl.
Despite some notable shrimp promotions launched by high-profile restaurant groups over the summer, American retailers have been more cautious, refraining from promotional activity and instead opting for reduced sales volumes while maintaining prices to attain desired profit margins. This approach led to a substantial price disparity between wholesale and retail prices, van der Pijl said, though the impacts of that situation may be blunted in the data because the trend began in 2022.
“Although imports will likely show an upward trend as we usually see toward the end of the year, I’m not convinced that we’ll see an increase in imports year over year [in the U.S.],” van der Pijl said. “Nevertheless, the year-over-year drop in imports may be slightly less than in the first half of 2023 because imports were already dropping from the second half of 2022.”
The E.U.’s H1 2023 shrimp import volume declined 9 percent year over year, less significant than the 18 percent drop seen in the U.S. over the same period. But the E.U. is likely to increase its shrimp imports toward the end of the year thanks to its reportedly lower inventories, van der Pijl said. He expects the bloc’s raw shrimp imports to reach 300,000 MT this year, which would be a 10 percent drop from 2022.
“Keeping in mind the economic situation [in the E.U.], it’s unlikely that we’ll see a year-over-year increase,” van der Pijl said.
Like the E.U., Japan also saw its H1 shrimp imports contract 9 percent year over year. The country’s shrimp imports are expected to reach 180,000 MT in 2023, continuing a decade-long decline.
Production-wise, Ecuador consolidated its position as the world’s foremost shrimp producer, achieving export volumes of 606,048 MT in the first half of this year, up 19 percent year over year. Its export value totaled USD 3.3 billion (EUR 3.1 billion), remaining almost unchanged from the same period last year due to lower prices.
Some industry sources believe that Ecuador will have to slow down its exports in the second half of this year due to reduced global demand, but some Ecuadorian producers may not have gotten the memo, with many remaining in expansion mode, according to van der Pijl. This is partly due to recent investments in new processing capabilities and the financial prerequisite they are operated at maximum capacity. For the Ecuadorian shrimp sector, the primary consequence of elevated expenses and depressed prices is likely consolidation, with larger companies acquiring companies unable to cope with current cost and pricing dynamics, van der Pijl said.
However, there is speculation producers in other areas of the globe may decrease their production ahead of their Ecuadorian counterparts, enabling Ecuador to sustain its growth, van der Pijl said.
Photo courtesy of Lewis Tse/Shutterstock
