Surimi processors face price squeeze

News 13:45 13/09/2014

(IntraFish) European processors are in for tough times as prices of surimi base from Season A Alaska pollock are up by 15 to 18 percent this year, a surimi base trader and consultant said.

Low stocks in Japan saw Japanese buyers approach Alaskan pollock sellers already last December, Pascal Guenneugues, founder and director of Future Seafood, said.

“Negotiations for surimi base from Season A pollock last year was negotiated in March-April. But this year they started in the first week of January and are already over,” Guenneugues said.According to him, prices are up by 15 to 18 percent compared to last year.

In Japan, grade A surimi base for this season sold at ¥300 (€2.75/$3.69) to ¥330 (€3.03/$4.06) per kilo for delivery in Tokyo.

Grade B sold at ¥240 (€2.2/$2.95) to ¥260 (€2.39/$3.2) and grade K at ¥270 (€2.48/$3.32) to ¥290 (€2.66/$3.57), while Grade SA traded at ¥380 (€3.49/$4.68) to ¥400 (€3.67/$4.92).

The increase is partly a result of an unexpectedly strong demand from Japan. “With the earthquake and tsunami, people expected consumption to decrease in Japan. But instead, consumption rose by around 2 to 3 percent last year,” Guenneugues told IntraFish.

Combined with the low inventories they had, the result was that “Japan has come back to an important demand for pollock. Currency exchanges have also played a part. The Japanese yen has greatly strengthened over the past year, giving Japan stronger purchasing power.

The story is not so positive for European buyers, however. “For the European processors, this poses a big problem. Distributors are flatly refusing to increase their prices, so they will have to work at lower margins.”

European processors’ situation is compounded by realities of over-capacity, and an overall rise in all raw material prices, he said. “It will be a tough year for the processors.”

Switching to other sources of surimi base, such as tropical or freshwater species, is not necessarily that easy, he said.

“There is for instance pressure for some to have the Marine Stewardship Council label... Then it’s simply a matter of quantity -- Europe usually buys around 25,000 to 30,000 metric tons of Alaskan pollock surimi base; there’s simply not enough tropical species surimi base to replace that.”

And pollock-based surimi is not the only one to see an increase this year. Higher consumption in South East Asia, and especially China, has pushed up prices of grade A surimi base from tropical and freshwater species by up to 15 to 20 percent, Guenneugues said.

While statistics are hard to come by in the case of China, Future Seafood estimates that the country consumes around 300,000 metric tons to 500,000 metric tons of surimi products.

“China used to be the largest producer in Asia but they have been producing less in the past two years. Estimates of their surimi base production vary from 120,000 metric tons to 200,000 metric tons.”

The result is that China has become “in deficit. They now buy a lot from Vietnam and India. They used to export around 30,000 metric tons to each Japan and Korea, but now that’s been significantly reduced.”

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