China’s demand for seafood remains strong, despite recent rising prices and scarcity of some items.
Jack Yuan, the director of seafood importer What Fresh, which has offices in Hong Kong and mainland China, said recent flare-ups of COVID cases in China, including an outbreak in Guangzhou, have caused interruptions in the flow of some seafood around the country, but have not dampened demand.
“Most seafood has picked up volume as the COVID situation in China [has come] under control,” Yuan said.
However, a tightened inflow of imports appear to be driving Chinese seafood prices higher, and transport costs however have gone up significantly, “which impacts full recovery of volume,” Yuan told SeafoodSource.
The higher prices are due to lower supply rather than higher feed prices, according to Jian (Jim) Zhang, the head of aquaculture at the U.S. Soybean Export Council’s China office.
“I doubt the total use of soy for aquafeed will increase due to the fewer fish in the ponds, which is directly caused by the high prices of fish in the market,” Zhang told SeafoodSource.
Zhang said a trend of weak demand seen last year, causing farmers to hold onto their stocks in hope of higher prices post-pandemic, had now reversed.
“The seafood price increase is, in my opinion, not caused by the increased price of soybeans, but because of fewer fish available in the market,” Zhang said.
China’s soybean imports from the U.S. have surged this year in part due to a drought in Brazil, its key supplier, Zhang said.
Recent commentary on the China central TV finance channel suggested that feed prices for pigs and aquaculture have risen due to tighter supply of soy. Chinese economic commentators have in recent weeks focused on the challenge posed by rising commodity prices for the local manufacturing sector as well as for consumer price inflation.
A broader slowdown may be on the way for the Chinese economy, in line with pre-pandemic government priorities like controlling ballooning credit and debt, according to Alicia Garcia Herrero, the chief Asia-Pacific economist at the Hong Kong offices of French investment bank Natixis. The latest economic release “seems to have confirmed that China is now in a stable but steady slowdown,” said
“In fact, the Chinese economy lost steam across the board in both consumption and investment in May since the base effect was less favorable than in previous months,” she said. “But the double-digit growth for both indicators is still high compared to the historical average in recent years.”
Natixis is projecting “moderately strong” GDP growth of 7.8 percent for China in 2021.
“If the current trend continues, Chinese economy will slow down in line with the expectation of a much lower growth rate for the second half of the year due to the less-favorable base effect as well as the decelerating support from external demand,” Garcia Herrero said.
As for seafood shortages, the bulk of current challenge facing China is on the supply side, according to Jack Yuan from What Fresh. Yuan said he wants to import more brown crab from Northern Europe but is having difficult getting them into the country. European crabs have been barred from the Chinese market in the past year due to excessive levels of cadmium, a naturally occurring element in sea caught seafood. A new testing regime imposed by China last year has resulted in longer wait-times for results and for export paperwork, making trade increasingly difficult proposition for Irish exporters.
“Only Dutch exports are processed with priority,” he said. “U.K. crabs are inspected on every shipment, making it impractical [to import] while the Irish Sea Fisheries Protection Authority still refuses to issue health certificates for brown crab exports.”
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