The ongoing trade conflict between the United States and China is creating an opportunity for Vietnam’s top shrimp company, Minh Phu Seafood Corp., but is also driving up its shrimp stockpiles, company chairman and CEO Le Van Quang told SeafoodSource on Friday, 22 February.
Minh Phu’s shrimp inventory hit a high of 11,500 metric tons (MT) as of December 31, 2018 – more than double its average stockpile of 5,000 MT in previous years, Quang said. The situation has improved in recent weeks, but the stockpile remains high compared with previous years, he added.
Quang said the situation was a result of China sending out a massive amount of exports of seafood and other products to the United States in the weeks and months prior to the U.S. tariffs taking effect, with the goal of avoiding higher duties. The sudden high demand of ships and storage capacity from Chinese exporters prohibited Minh Phu from shipping its shrimp products to the U.S., despite having already signed contracts with buyers in the U.S. Quang said transportation costs rose sharply and Minh Phu was unable to hire ships because of fierce competition from Chinese exporters, who were willing to pay double the typical rate to have ships by any means.
“Some ships carrying Minh Phu’s products had to wait at U.S. ports for even a month but failed to unload as storage capacity there was already filled with Chinese goods,” Quang said.
Minh Phu produced 67,646 metric tons (MT) of shrimp in 2018, rising 19.5 percent from 2017, and took in USD 750.7 million (EUR 661.3 million), up 7 percent year-on-year. That figure fell short of the target of USD 800 million (EUR 704 million) that Minh Phu had expected to achieve for the year. Quang said lower shrimp prices and the trade war impacts were there main contributors to Minh Phu’s inability to hit its target.
The company predicts it will produce 77,400 MT of shrimp in 2019, up 14.4 percent year-on-year. It aims to earn USD 850 million (EUR 748.8 million) from shrimp exports in 2019, up 13.2 percent from last year, according to Minh Phu. Quang said the company plans to export 8,000 MT of shrimp by mid-March 2019.
In a stakeholders’ extraordinary general meeting on 10 November, 2018, the company approved plans to build a breaded shrimp processing plant in Vietnam and two cold storage facilities in the United States, with a view to taking advantage of the trade war between the U.S. and China. A number of U.S. importers have approached Minh Phu and asked it to increase sales of breaded shrimp to the United States, as Chinese breaded shrimp has gotten more expensive due to the tariffs.
