April 20, 2007

 

Growth in Thailand's seafood exports to slow in 2007

 

 

Thai seafood exporters would be unlikely to see a repeat of 2006, where US shrimp imports were at historical highs, according to stock analysts.

 

The value of US shrimp imports from Thailand reached US$4.1 billion in 2006, up 13 percent while volumes have increased 16 percent.

 

Thai shrimp and tuna exports to the US are also expected to be flat this year.

 

Thailand is the number one exporter of shrimp and canned tuna to the US.

 

However, a slowdown in demand from the US markets should be somewhat offset by better prospects in the EU and Japan, analysts believed.

 

Thus, big exporters like Charoen Pokphand Foods (CPF) and Thai Union Frozen Product (TUF) would likely be unaffected, they said. Shrimp only makes up 10 percent of the CPF's total sales and the decline in shrimp would be easily offset by better meat sales in new markets.

 

TUF, on the other hand, would be harder hit as more than half of its sales is based in the US: half of that in tuna and a-fifth in shrimp. However, the company's capability to open other markets, its cost efficiency and innovative product development should see it through and limit any negative impact.

 

Growth in the Thai market is expected to take a breather as US demand becomes stagnant and prices may even see a decline. Consumption, although growing at 4 percent, could not catch up with the surge in supply, which grew at 12 percent last year.

 

In January 2007, shrimp imports grew just 2.9 percent in volume, a departure from the strong growth seen in previous years.

 

The slowdown in growth was due mainly to growth in other similar products such as frozen processed shrimps and peeled shrimp. Still, imports of headless shell-on and breaded frozen were shrimp lower in January this year than in January 2006.

 

The US market for Thai tuna was unimpressive last year, showing a 10-percent decline in canned tuna on an on-year basis. Prices have only gone up slightly despite larger increases in cost.

 

Canned tuna is expected to do slightly better this year, growing 5 percent from last year's disappointing performance.

 

Growth in Europe and Japan, which is expected to offset the decline in the US market, would be more apparent.  Part of that growth would be coming from new value added products.

 

Exports to the EU are expected to increase due to a higher quota set for ASEAN countries and a halving of tariff rates to 12 percent.

 

Demand for shrimp in the EU is also growing strongly, with consumption having increased at 14 percent last year and is expected to grow at similar rates this year.

 

The Japan-Thailand Economic Partnership Agreement (JTEPA), which would remove tariffs on Thai shrimp imports entirely and skipjack tuna products in five years, is expected to boost the country's seafood exports to Japan.

 

Furthermore, the strong baht, which has been the bane of Thai exporters in the past few months, is finally stablilising. There are also indications that the US may lift antidumping duties on Thai shrimp soon

 

Even though growth is slowing down, no huge declines in exports are expected unless the baht continues to appreciate or if there is a drastic slowdown in the US, analysts said.