Wildcaught groundfish supplies are expected to decline by almost 200 000 tonnes in 2018. Further cuts in whitefish quotas on the US East Coast will contribute to price rises and increased US imports of groundfish in the coming 12 months. Prices will stay high. Global surimi production fluctuated over the past decade. Production increased by about 200 000 tonnes until 2009, but this led to an oversupply situation and a subsequent drop in production. In 2014 production grew again by 40 000 tonnes and in 2017 global surimi production reached 820 000 tonnes. Most of this increase came from tropical species. But in 2017, there was a marked decline in production of tropical surimi.

Resources

The International Council for the Exploitation of the Sea (ICES) has recommended that the cod quota in the Barents Sea be set at 674 678 tonnes, 13 percent less than the total allowable catch (TAC) set by Norwegians and Russians in November 2017. ICES also recommended a 25 percent cut in the haddock quota in the Barents Sea to just 152 000 tonnes.

Estimates by Kontali Analyse indicate that groundfish supplies will decline by 193 000 tonnes in 2018 compared to 2017. However, this will be more than compensated by a massive increase in farmed whitefish supplies, which are estimated to increase by 539 000 tonnes.

ICES recommendations for Iceland included a 41 percent increase in the haddock quota to 57 982 tonnes in the 2018/2019 season, a small increase (3 percent) in the cod quota to 264 437 tonnes and a 31 percent increase in the saithe quota to 79 092 tonnes.

The cod fishery off the east coast of Canada is still suffering. In June, the Canadian Department of Fisheries and Oceans (DFO) reduced the cod quota off the Northeastern coasts of Newfoundland and Labrador by 25 percent, to 9 500 tonnes. This decision was expected following the stock assessment published in March that revealed a 30 percent decline in cod biomass.

The 2018 quota for the US Pacific hake fishery is kept at the same level at 441 433 tonnes. In the agreement between the United States of America and Canada, 73.9 percent of this quota is allocated to the United States of America and the rest is allocated to Canada.

The Russian Federation research centre TINRO recommended an increase in the TAC for Alaska pollock for the 2019 fishery. According to the researchers, the total allowable Alaska pollock catch is expected to be 1 781 300 tonnes, of which 733 800 tonnes will be caught in the Bering Sea.

Processing

In spite of high prices, many UK fish-and-chip producers are unlikely to abandon cod and haddock as a raw material. UK consumers will still demand cod and haddock even if prices go up. Fish-and-chip shops have tried offering Alaska pollock, saithe or even farmed pangasius, but the vast majority of customers prefer cod or haddock. Tradition is very strong in this field and taste and texture are much better.

Surimi

The French surimi industry is declining. Since the summer of 2017 until May 2018, production volumes fell by 2.4 percent to 41 000 tonnes. The slow-down is attributed to a lack of innovation in the industry, and to the fact that the market now seems to be mature. Consequently, price discounts have been used. In addition, the French press had reports of lower fish content in surimi than previously, and the adverse publicity may have affected consumer demand.

Production of tropical surimi in Southeast Asia declined in 2017 due to overfishing of tropical species, according to a spokesman from Oregon State University. In 2016, the world produced 850 000 tonnes of surimi, of which about 510 000 tonnes came from Southeast Asia. Overfishing in the region has increased, depleting the resource, particularly in Thailand, and landings are therefore down. Thai surimi production, for example, dropped from over 100 000 tonnes in 2012 to just 52 000 tonnes in 2017.

Trade

The Norwegian Spring cod season was very good, and Norwegian cod exports hit record levels in value terms. During the first three months of 2018, Norway exported 25 000 tonnes of fresh cod worth NOK 813 million (USD 100 million). This represented an increase of 4 percent by value, despite the 3.7 percent decline by volume. Exports of frozen cod increased by 2.3 percent by volume to 16 619 tonnes, and by 9.8 percent by value due to price rises.

According to the Norwegian Seafood Council (NSC), exports of conventional products such as klipfish and stockfish were also up. Exports of klipfish (salted and dried cod-like fish) amounted to 28 000 tonnes worth NOK 1.2 billion (USD 150 million). This represented an increase of 5 percent by volume and 10 percent by value. Exports of salted fish went up by 4 percent to 13 000 tonnes during the first four months, at a value of NOK 99 million (up by 18 percent).

Chinese imports of cod during the first three months of 2018 were stable and at the same level as during the same period in 2017. The country imported 45 000 tonnes of cod products. Imports of Alaska pollock fell by 17 percent to 207 000 tonnes, mostly coming from the Russian Federation (95 percent). Chinese exports of Alaska pollock also fell by 19.5 percent, from 72 000 tonnes during the first quarter of 2017 to 58 000 tonnes during the same period in 2018.

German and Dutch imports of Alaska pollock were flat during the first quarter of 2018 compared to the same period in 2017, at 39 000 tonnes and 32 000 tonnes, respectively. Main suppliers to Germany were China and the United States of America, while the main suppliers to the Netherlands were the Russian Federation, Norway and Iceland.

Alaska pollock exports from the Russian Federation fell by 16.8 percent to 278 000 tonnes during the first trimester of 2018. China was the main market, accounting for as much as 78 percent of the total Russian Federation pollock exports during this period.

Consumption

Over the years, consumer behaviour seems to change in different ways. Sometimes this is related to changes in supplies, other times in response to new product development. But there are also other drivers. For example, the US Alaska pollock market is changing, according to Torunn Knoph Halhjem of Trident Seafoods. While the traditional drivers in the market remain the same like Japan for roe and surimi, the United States of America for fillets, Europe for blocks and China for H&G, new forces are at play. There is a strong growth in US demand for “Alaska pollock”, an American product, which was not a major driver earlier, according to Halhjem.

The increasing supplies of farmed whitefish are creating a differentiation in the whitefish/groundfish market. Most of the farmed whitefish is freshwater fish, and consumer attitudes towards freshwater versus saltwater fish varies greatly. In many markets, marine fish are much preferred and when freshwater fish is offered it has to be priced lower than saltwater fish. In some markets, products like “skrei” (spring cod caught in northern Norway) have been introduced as a higher quality (and higher priced) product. An even further differentiation in the market seems possible and should be explored by the industry.

Prices

Prices of groundfish raw material have gone up. During the Brussels Seafood Show, experts predicted an increase in Alaska pollock prices during the rest of 2018. Prices are already up sharply compared to the end of the 2017 B season, when PBO pollock was sold for USD 2 300–2 350 per tonne. This is considerably less than the peak prices in the 2009 A season, when prices as high as USD 4 500 per tonne were registered. Presently, prices are moving in that direction, and may reach the 2009 level again.
H&G cod prices in early May were at USD 4 400¬4 500 per tonne (CNF) for sizes 1.0–2.5 kg, from processors in China, up from USD 4 250–4 300 per tonne in March. Prices for double frozen blocks were firm at around USD 2 650–2 700 per tonne.

The EU28 market fears that prices may increase for both Alaska pollock and cod. Russian Federation origin supply volumes of Alaska pollock are expected to be slightly lower this year, and this will push prices up. Another reason for the price increase is the strong demand for surimi in Japan. But demand for surimi is also growing in other parts of the world. Demand for specifically Alaska pollock surimi is currently very strong and growing stronger as inventory levels decline. Demand for Alaska pollock fillets and blocks outside Europe is also good, and this will affect prices on the European market.

The high H&G cod prices may be reaching a plateau, according to experts at the Brussels Seafood Show in April. Danish company A. Espersen, one of the largest cod buyers in the world, confirmed that prices had moved up faster than expected and that the cut in the US Pacific cod quota had not been foreseen. This contributed to keeping prices for Atlantic cod at a high level. But with the high cod prices, some buyers may now move to haddock or Alaska pollock, which are still at a lower price than cod.

Outlook

Supplies of groundfish will be declining in the coming twelve months, but they will be compensated by a massive increase in supplies of farmed whitefish. However, customer preference for marine groundfish will probably push prices up since availability is low. Prices are likely to rise in the coming months and stay high well into 2019.

The outlook for the cod fishery on the east coast of North America is not good, and it will take time to re-build the stocks here. Consequently, less domestic groundfish will be available on the US market, and increased imports are likely. Tropical surimi production may increase again after falling last year.