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1 Aquaculture Bulletin HEADLINES 08 / a guideline for investors in the aquaculture business * Still high prices on the wholesale markets in the EU, with total supply of Atlantic salmon up with 4.6 % in March this year compared to March last year. * In Japan, Atlantic salmon prices are on the rise, and current levels haven t been seen since June Also trout prices are trending upwards in the wholesale markets, even though the same trend can not be found for Chilean products on an export price level. * In the section Other Markets, we are having a closer look at trade barriers, both in Russia and India. * Lastly in the section Other Species, a more in depth analysis of farmed pangasius, which is rapidly capturing market shares in the EU-25 seafood market. Published by: Industriveien 18 Phone: N Kristiansund Fax: NORWAY mail@kontali.no All material in this publication is protected by copyright. Photocopying of any part of this publication for any purpose, copying, reproduction, transmitting in any form or by any means or storing in retrieval system is prohbited by law,unless permission has been granted in advance by Kontali Analyse AS. 11

2 The UK salmon and seafood market On the British Isles there are long traditions in consuming seafood and the seafood consumption in UK is among the highest in the EU. And the seafood consumption is rising. According to FAO the supply of seafood totalled 23 kilo per capita in This is 2.3 kilos higher than one decade ago and 5.5 kilos higher than 2 decades ago. Demersal fish species are dominating the UK market in regard to consumption, however, due to reduced stocks supply is showing a downward trend (see figure to the right) In addition in being the largest salmon producing country in the EU, UK is also one of the largest markets for Atlantic and Pacific salmon in the EU Seafood Supply/Cap/Y (Kg) Pelagic Supply/Cap/Y (Kg) Demersal Supply/Cap/Y (Kg) Marine Supply/Cap/Y (Kg) Molluscs Supply/Cap/Y (Kg) Due to a downward production trend which began in 2004 and accelerated in 2005, and increased demand for farmed Atlantic salmon, both imports and consumption of farmed Atlantic salmon in UK reached all time high. The drop in harvest of tonnes wfe was more than compensated by increased imports (+95%) and reduced exports (- 21%). Total consumption of farmed Atlantic salmon totalled almost tonnes wfe in 2005 (+11% from 1994) which correspond to a per capita consumption of 1,89 kilo (wfe).(the graph below shows development in UK harvest, exports/ imports and consumption of Atlantic salmon in tonnes wfe) UK harvest of Atlantic salmon Foreign supply of Atl. salmon UK exports of Atlantic salmon UK consumption of Atl. salmon E As seen in the graph above the imports of Atlantic salmon almost doubled in 2005 (on wfe basis). Who supplied the UK market? Foreign supply of fresh gutted salmon increased by 138% - to tonnes product weight in The main supplier was Norway with a market share of 86%. Chilean frozen salmon fillets gained huge markets shares in many EU countries in The same trend was also applicable for the UK market. Supply from Chile of frozen Atlantic salmon fillets totalled almost 1300 tonnes product weight which is almost 5 times higher than in On frozen fillets Chile gained a market share of 39%. On the fresh fillet side Norway had a market share of 83%. Total for the fillet segment Chile had a market share of 24% and Norway 43%. Fresh Atlantic salmon Chile Ireland Denmark Norway Others 86 2

3 The graphs below show supply trend of Atlantic salmon fillets (left) and market shares Atlantic salmon fillets (right). Fresh/frozen salmon fillets Fresh/frozen salmon fillets tonnes Others Denmark Ireland Norway % 3 16 Chile Ireland Denmark Norway Others In addition to all time high foreign supply and consumption of Atlantic salmon, the market prices trended at relatively high levels through Fob export prices for fresh Atlantic salmon of Norwegian origin were in average NOK /kilo in 2005, up from NOK in 2004 and NOK in 2003.( the graph shows development in fob export prices for fresh salmon from Norway) Fob export prices for frozen Chilean salmon fillets showed somewhat the same trend with rising prices through Average fob export price in 2005 was USD 4.51/kilo up USD 0.3/kilo from NOK/kilo 31,0 29,0 27,0 25,0 23,0 21, ,0 17,0 15,0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec The tables and figures above is an excerpt from Salmon Market Analysis 2005 which contains markets trends for the 30 largest salmon markets in the world. More information on the report is available at: 3

4 FISH MARKET TRENDS EU MARKET - ATLANTIC SALMON Total supply of Atlantic salmon (fresh+frozen) on the EU-market, wfe. E 06/05 Jan ,6 % Feb ,9 % Mar ,6 % Apr May Jun There are still high prices on the Rungis wholesale market outside Paris, with Norwegian salmon trading at EUR 5.10 /kg for all sizes and Scottish salmon trading at EUR 6.10 /kg in week 16. On the Mercabarna whole salmon market, salmon was traded at EUR 5.59 / kg in week 16 As mentioned in the previous edition of KAB, exports of frozen Atlantic salmon fillets from Chile to the EU dropped in February. Exports figures for March are still not available for Chile, but export figures from Norway show a record high tonnes wfe for March. Exports of fresh Atlantic salmon (head on) were about tonnes product weight, or tonnes wfe, and the Fob export price for fresh Atlantic salmon was NOK /kg. jan-jun Jul Aug Sep Oct Nov Dec Jul-Dec Scottish fresh Atlantic salmon 3-4 kg wholesale prices, Rungis-market tonnes wfe Supply of Atlantic salmon from Norway to the EU in March EUR/kg 7,0 6,5 6,0 5,5 5,0 4,5 4,0 3,5 3,0 2, Norwegian fresh Atlantic salmon 3-4 kg wholesale prices, Rungis-market EUR/kg 6,0 Exportprice from Norway to the EU FOB, NOK/kg Fresh Atlantic salmon (head on) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5,5 5,0 4,5 4,0 3,5 3,0 2,

5 US MARKET - ATLANTIC SALMON Total supply of Atlantic salmon (fresh+frozen) on the USA-market, wfe E 06/05 Jan ,8 % Feb ,0 % Mar ,6 % Apr May Jun jan-jun Jul Aug Sep Oct Nov Dec Jul-Dec Fresh Atlantic salmon 4-5 kg wholesale prices, Fulton N.Y. USD/kg ,8 6,4 6 5,6 5,2 4,8 4,4 4 3,6 3,2 Chilean fresh Atlantic salmon fillets 1-1,5 kg prices, delivered FOB Miami USD/kg 8,8 8,4 8 7,6 7,2 6,8 6,4 6 5,6 5,2 4,8 4,4 4 6

6 JAPAN MARKET - ATLANTIC SALMON Total supply of Atlantic salmon (fresh+frozen) on the Japan-market, wfe E 06/05 Jan % Feb % Mar % Apr May Jun Norwegian frozen Atlantic salmon 4-5 kg wholesale prices, Tsukji-market YEN/kg 750 jan-jun Jul Aug Sep Oct Nov Dec Jul-Dec Norwegian fresh Atlantic salmon 3-4 kg wholesale prices, Tsukji-market YEN/kg As seen in other markets, market prices for Atlantic salmon in Japan are on the rise. Ultimo April wholesale price for fresh Atlantic salmon of Norwegian origin, 3-5 kilo, were JPY 1075/kilo in average. This is the highest levels seen since June The high price level must be seen in relation to the tight global supply situation for Atlantic salmon so far in The same trend is seen in export figures from Chile to Japan for the first quarter of In March exports of frozen Atlantic salmon fillets to Japan dropped by 17% and by 13% in Q1. Average export prices were up 10% during Q1. In March average fob export price was USD 6.55/kilo which is USD 2/kilo higher than in March last year (+44%). Exports of frozen Atlantic salmon fillets from Chile to Japan are presented in the table and graph below. Japan - quantity Exports of frozen Atl salmon fillets to JAPAN in tonnes product weight /06 Jan % Feb % Mar % Apr 634 May 550 Jun 612 Jul 721 Aug 920 Sep 609 Oct 561 Nov 694 Dec 437 Total YTD % 6,60 6,40 6,20 6,00 5,80 5,60 5,40 5,20 5,00 4,80 4,60 4,40 4,20 4,00 Jan Monthly fob export prices frozen Atl salmon fillets USD/kilo Japan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 8

7 OTHER MARKETS - ATLANTIC SALMON Total supply of Atlantic salmon (fresh+frozen) on other markets, wfe E 06/05 Jan ,2 % Feb ,6 % Mar ,3 % Apr May Jun jan-jun Jul Aug Sep Oct Nov Dec Jul-Dec Exports of frozen Atlantic salmon (head on) from Norway to Russia continued to increase also in March, probably as a consequence of the import ban for all fresh fish. The Norwegian government and the Norwegian salmon industry have since the 1 st of January tried to have the import ban lifted and in April, media reported that two harvesting plants, owned by Marine Harvest and Pan Fish, were granted a permission to resume exports to Russia. At the moment, it is still uncertain if any other harvesting plants will be approved for exports of fresh fish to Russia. Product weight Exports to Russia from Norway Frozen Atlantic salmon (head on) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average price Norwegian Atl. salmon, packed gutted, superior quality, FCA Oslo NOK/kg Meanwhile, exports of fresh Atlantic salmon from the UK have shown a tremendous growth. Exports of fresh Atlantic salmon for January only show about 20 tonnes product weight, but for February exports reached almost 540 tonnes product weight. This might not seem like a very high quantity compared to Norway s exports of fresh Atlantic salmon (head on) of tonnes product weight in February 2005, but it is a huge increase compared to the 31 tonnes product weight of fresh Atlantic salmon UK exported to Russia for the whole year In other markets, India reduced the import duties on Norwegian fresh and frozen Atlantic salmon from 30 % to 10 % with effect from the 1 st of April. As the table below shows, India is currently not an important export market for Norwegian Atlantic salmon, but the lower tariffs may give an opportunity for increased exports. Product (Tonnes product weight) Fresh Atlantic salmon (head on) Fresh salmon fillets Frozen Atlantic salmon (head on) Frozen salmon fillets Smoked salmon Smoked fish, other

8 JAPAN MARKET - RED SALMON Trout prices in Japan are still trending upwards. Ultimo April Japanese wholesale prices for frozen h/g trout of Chilean origin were JPY 625/kilo and JPY 655/kilo for frozen h/g trout of Norwegian origin (size 2-3 kilo). Even though wholesale prices for Chilean products are trending well above the price level seen last year (+10%), the same trend can not be found on an export price level. In the first quarter Chilean export prices for frozen h/g trout were slightly above the level in 2005 and in March the fob export price was on the exact same level. This indicates that the wholesale margin in Japan has been higher in Q Export volumes for frozen h/g trout from Chile to Japan dropped by 8% in Q1, to tonnes product weight. The export trend for frozen trout from Chile to Japan is presented in the table and graph below. Japan - quantity Exports of FROZEN H/G TROUT to JAPAN in tonnes product weight /06 Jan % Feb % Mar % Apr May Jun Jul Aug Sep Oct Nov Dec Total YTD % 4,50 4,30 4,10 3,90 3,70 3,50 3,30 3,10 2,90 2,70 2,50 Jan Monthly fob export prices frozen h/g trout USD/ kilo to Japan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Chilean frozen coho 4-6 lb wholesale prices, Tsukji-market Bristol Bay frozen sockeye 4-6 lb wholesale prices, Tsukji-market Chilean frozen trout 4-6 lb wholesale prices, Tsukji-market YEN/kg 750 YEN/kg 700 YEN/kg EXCHANGE RATES CLP / USD 700 GBP/EUR 0,75 YEN/USD ,72 0,69 0, , , NOK/EUR 9,2 NOK/YEN 7 8,8 6,5 8,4 6 8,0 7,6 5,5 7, NOK/USD 7,5 7 6,5 6 5,

9 FUTURE SUPPLY Estimate total biomass Europe, tonnes wfe Estimate total biomass America, tonnes wfe E Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec E Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Biomass Europe and Americas The total biomass including Europe and America is higher compared to same period last year. Ultimo march the biomass is estimated to approx tonnes wfe, which is an increase of approx. 10 % compared to last year. Europe, and especially Norway has a relatively high share of the total biomass. The biomass in Norway is estimated approx. 6 % higher than last year. Good growth conditions in UK last year combined with some escapes in the start of 2005 give an increase in the biomass of approx. 15 %. After several years of biological problems, the smolt release in Ireland increased last year, and resultes in a higher standing biomass this year. The increase in the standing biomass in Europe is approx. 8 % compared to last year. The result of the relatively bad growth conditions in Chile last year, has led to lower standing average weights, especially on the 05G. An increasing smolt release last year, gives a higher biomass compared to last year. Also North America has a higher production of Atlantic salmon last year. The international companies have structured their management to more productive areas than earlier, and it seems to have a positive effect of the production. The total growth in the biomass of Americas is approx 14 % compared to the same period last year. Tonnes wfe Biomass Europe and Americas Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 12

10 ALL MARKETS - OTHER SPECIES Pangasius Rapidly capturing a larger share of the EU-25 seafood market Farmed pangasius (also known as basa and tra) is rapidly capturing market shares in the EU-25 seafood market. From being a specie practically unknown before year 2000, the imports of this specie have exploded the latest years, and in 2005 almost tonnes were imported. The pangasius has a relatively low cost of production, and is imported into Europe at very competitive prices. Fillets imported at a price slightly above 2 EUR/kilo will for sure be an attractive choice for price-sensitive consumers Imports to EU-25 from Vietnam Frozen fillets of freshwater fish Quantity (Tonnes) Tonnes Price Price (EUR/kg) In the table below it can be seen that the growth from year 2004 to 2005 reached 191%. The growth has continued in year 2006, and while tonnes were imported in year 2005, it has already after two months of 2006 been imported tonnes. Imports from Vietnam of Pangasius to EU-25 Growth % Tonnes Jan - Feb /2004 Germany % Spain % Belgium % Netherlands % Poland % Italy % Others % Total % The graph below show that quantities in the recent months are well above last year. Tonnes Pangasius Monthly imports to the EU-25 from Vietnam