Vietnam seafood export to recover in Q.III/2012

The overview of seafood trade abroad in Q.III/2012 is figured out by the six following forecasts:

1. Lack of raw material for processing and export continues to be seen through the third quarter of 2012. The situation is predicted to be less severe in late September, when government approves the loan package of VND9,000 billion to save pangasius industry. The new cash injection is expected to boost raw pangasius production and facilitate processors’ fish purchasing activities. In July – September 2012, there are very large shrimp farming areas coming into harvest. New shrimp sources are to compensate to losses due to spreading shrimp diseases in the previous quarters. However, this is also the main harvesting time in some producing countries India and Thailand, which then place their shrimp in the global main markets and cause tougher competition among suppliers. Marine fish for processing is said to be more abundant from both domestic and outside sources. Marine products companies will import more tuna, squid and octopus for inventories to satisfy processing needs when the domestic supply fell to low levels. In Q.III/2012, Vietnam must spend around US$60 – 65 million to import raw materials (black tiger shrimp, whiteleg shrimp, tuna, squid and octopus, marine fish…) for and further processing for export and carrying out processing contracts with foreign partners

2. In Q.III/2012, input cost will remain at the same high level of the previous month and be around 15 – 25 percent higher than the same period of 2011 (by different types of products and company’s scale) after hike of all costs (worker salary, raw material, packages, electricity, water, shipping and transportation, fuel, quality testing fees…). There are also some new fees, including environmental tax for nylon package used in seafood products packaging. Banks has reduced loans rate to 10 – 12 percent since July 2012, but credits for production activities are still tightened. The two mentioned problems lead seafood companies to be trapped in persistent troubles. Therefore, many companies find hard to intensify production in the third quarter. They may consider to reducing production volume, cut off expenses to keep business. Vietnam seafood industry will gain less growth in export in the coming time.

3. In late Q.III/2012, some recently new regulations and policies will be amended to facilitate manufacturing sectors, especially seafood export-driven sector. Regarding environmental tax for nylon bag (PE) and quarantine fees for imported seafood for carrying out contracts with foreign partners, authorized agencies heard recommendations of business community and have some positive signs to solve the problem. Regulation amendments are scheduled to be approved in late Q.III/2012, helping reduce pressures of fees and administrative procedures on processors and exporters. However, the longer the amendments are still not applied the lower Vietnam exporters’ competitiveness against strong supplier countries like Thailand, China and Indonesia…

4. In regard to importing market structure, the EU still ranked the second importer of Vietnam seafood products in Q.III/2012. In the past months, earnings from the EU stayed monthly around US$100 million even in the peak time. However, due to weak seafood demand, July – September export to this market can not show recovery signs in Q.III/2012 with export value dropping by 10 – 12 percent from the same quarter of 2011. Export to Japan also slows down to growth of 22 – 25 percent, less than the level of 35 percent in Q.II/2012. This is due to Ethoxyquin testing rule set by Japanese government and huge international supplies of seafood to Japan market. In contrast, the U.S and other potential markets, including South Korea, Australia, Mexico, ASEAM countries, China and Hong Kong show strong demand for seafood from Vietnam. Most of them have more demand than the previous quarter.

5. Seafood export from July to September is expected to recover along with positive sings in both domestic and foreign markets. Vietnam seafood exporters will be able to earn US$1.84 billion, up 17 percent from US$1.567 billion of the second quarter and up 7 percent from the same period last year. It helps enhance total export value in the first three quarters to US$4.7 billion. In which, August – September sales broad will record considerable growth and compensate to the little growth in July from 3 – 5 percent lower than that of July 2011.

6. At least till August 2012, pangasius and shrimp products continue to see drop of around 10 percent in sales abroad compared to the compatible months in 2011. Shipments of the two items will get recovery in September because of positive signs from importing countries and those in domestic markets. Sales of whiteleg shrimp, tuna (HS code 03 and 07), marine fish, squid and octopus, crab and swimming crab will be accelerated in Q.III/2012. Tuna (HS code 03 & 16), marine fish and cephalopod items have favourable conditions to reach the value growth of 25 – 40 percent from 2011. Marine fish products bring back nearly US$675 million, equal to 36.6 percent in national earnings from export in July – September, including US$175 million from tuna; US$165 million from squid and octopus; US$35 million from crab and crustaceans, US$275 from marine fish of all kinds.

(According to Report on Vietnam seafood export in Q.II/2012 – VASEP)