Ecuadorian shrimp is continuing to pour into China despite a downturn in demand, causing a glut that is squeezing Chinese importers.
In May 2023, Ecuador sent 150 million pounds of shrimp to China, up 40 percent from 107 million pounds sent in May 2022. However, sales by value were up only 15 percent to USD 340.7 million (EUR ). Year-to-date, Ecuador’s shrimp exports to China are up 43 percent by volume to 698 million pounds, while its sales by value are up just 20 percent to USD 1.66 billion (EUR 1.52 billion). Prices paid to Ecuadorian exporters averaged USD 2.42 (EUR 2.21) per kilo in May 2023, the lowest level since May 2021.
While some of that increase is attributable to China lifting its zero-Covid policy in November 2022, resulting in a flood of goods hitting China in subsequent months, there has been a noticeable drop-off in demand in China, according to Seafood Guide, a Chinese publication covering the seafood industry. The drop in demand has resulted in stockpiling and a hesitance on the part of Chinese seafood firms and retailers to either buy more shrimp or reduce their prices. The futures market for Ecuador-origin shrimp in China is tepid, it reported.
“Chinese buyers who are interested in buying are more inclined to wait and see the market situation,” Seafood Guide reported. “The market is caught in a vicious cycle of high prices for maintaining frozen inventory, along with low futures prices and importers' domestic spot prices turning upside-down, coupled with lower borrowing costs.”
Chinese shrimp importers are facing tens of millions of dollars in losses, Chinese Kitchen Alliance General Manager Liu Yinhong said.
"2023 is foreseen to be a difficult year. The post-Covid impacts on the economy will continue and it will be difficult to adjust in the short-term." Liu said. “Conservative forecasts have it taking six months for normalization and confidence to return to the industry.”
Despite so much uncertainty, the situation has resulted in predications that domestic wholesale prices will remain stable in the short-term, according to Wang Hanwen, a shrimp importer in China.
“Ecuadorian manufacturers have collected feedback from the Chinese market,” Wang said. “The subsequent price market will be clearer."
Despite deflating global demand, Ecuador’s shrimp production is expanding in 2023. And more of that production may head to China as a result of the recently signed free-trade agreement between the two countries.
“If China stops buying, Ecuador’s exporters will have to accelerate their penetration of other markets to be able to sell the foreseen increase in output. In these other markets, they will be competing directly with India and other Asian suppliers,” Shrimp Insights Founder Willem van der Pijl said in a March 2023 blog post.
Photo courtesy of chinahbzyg/Shutterstock
