February 18, 2014

 

China's pollock raw material prices may drop

 

 

With production slowly ramping up after the Chinese New Year and the government in Qingdao cracks down on ammonia use in plants, Chinese pollock processors are expecting raw material prices to come down further.

 

The benchmark price of headed and gutted (H&G) pollock from Russia, which went over US$1,620 per tonne (cost and freight (CNF) China for 25cm + plus size) at the end of last year, has dropped to US$1,360/US$1,370/tonne at the moment.

 

Russian H&G prices rose as buyers held off because of speculation on if and when the Sea of Okhotsk fishery would get Marine Stewardship Council (MSC)-certified, which it did, late in the year. H&G prices dropped, as is the norm at this time of year.

 

Raw material prices may be down, but slow worker returns after the Chinese New Year break, are impacting the return to business for some, according to sources.

 

In Qingdao, production is also being slowed down by government taking a tougher stance on the use of ammonia in plants, after an accident last year at a plant supplying High Liner Foods, which killed seven.

 

Big volumes of orders after Chinese New Year are yet to come in, so, plants have time to get organised, as is usually the case this time of year.

 

"New pollock orders from Europe and the US will be arranged in February and March for 2014 season, especially for blocks. But this will depend when the single frozen block price fixed. Big buyers are waiting to see this," said the executive.

 

Demand on the volumes shipped from Russia has been good, because of companies with existing orders to fill.

 

As for the situation with labour, the shortage is worse this year, and there are even no workers in some plants, the executive said, adding it is still early days yet on workers returning.

 

According to the present worker situation, the production can be kept going to end of March or the start of April, he said. Production in February will be low, because of the fact many companies are using new workers, who will take some training, he added.

 

As usual at the start of the year, prices for H&G from Russia have dropped, with orders fulfilled from China in the run up to Chinese New Year. Prices for H&G in the 25cm+ category went from over US$1,600/tonne (CNF) China in November and December to US$1,360-US$1,370/tonne in January and February.

 

With the prices for single frozen pollock from the US and Russia - both now Marine Stewardship Council-certified - selling at around US$2,900-US$2,950/tonne, prices for H&G were expected to drop, to put double frozen prices further below single frozen.

 

At the end of last year, double frozen pollock fillet prices were close to the level of single frozen.