August 9, 2004

 

 

Thai Shrimp Exporters Optimistic About Low Dumping Fines

 

Thailand's shrimp exporters see a silver lining now that the cloud of speculation over U.S. anti-dumping penalties has lifted, with the low rates levied on Thai shrimp deemed favorable relative to those on shrimp from five other countries.

 

Industry leaders now expect Thailand's shrimp exports to increase substantially by 70 percent next year to 350,000 tons from about 230,000 tons this year, after the U.S. Department of Commerce late last month announced tariffs ranging from 5.56 percent to 10.25 percent on Thai shrimp.

 

Washington was responding to complaints from U.S. shrimpers, who said shrimp from the six countries were being sold below cost in the U.S. market. Thailand and the other affected countries contend that it is much cheaper to produce farm-raised shrimp than to catch them at sea.

 

Since the announcement, prices of local fresh shrimp have risen and export prices have also increased by 5-10 percent.

 

Pisit Ohmpornnuwat, managing director of C.P. Merchandising Co, a subsidiary of Charoen Pokphand Foods Plc, expressed optimism that orders would shift to Thailand from China and Brazil, which faced relatively higher penalty rates.

 

He said CPF was raising the production capacity of three processing plants in Rayong and Samut Sakhon from 14,000 tons this year to 32,000 next year.

 

CPF forecasts that its revenue from shrimp will double this year, according to CEO Adirek Sripratak.

 

Union Frozen Products (UFP), which faces the highest anti-dumping duties of any Thai company, said it was not very worried and pledged to provide accurate information to contest the ruling.

 

U.S. officials will visit Thailand over the next two weeks to collect more information from Thai exporters in order to determine the final penalty rate, which could apply for as long as five years.

 

While Thailand appeared to have an edge, it was still difficult to estimate the extent of U.S. shrimp imports from Thailand. One reason is that Thai exporters had delayed committing to new shipments for four months while they awaited Washington's ruling.

 

As well, he said, it was difficult to estimate local shrimp output now that most local shrimp farms were small-scale operators. How well farms are managed in response to demand fluctuations was an important factor, he added.

 

Last year, UFP exported 14,500 tons of shrimp, 12,000 of which went to North America, and the remainder to the European Union, Japan and Australia.

 

The company is now looking to other export destinations to reduce its dependence on the U.S. market, while expanding production to cooked products to supply the EU and Canada.

 

Thiraphong Chansiri, the president of Thai Union Frozen Products Plc, said that despite the low penalty rates imposed by Washington, Thai exporters still felt dissatisfied since they were not guilty of dumping in the first place.

 

He said competition in the U.S. market would remain intense, as the penalty rate on Ecuador was not much higher than the rates on Thai shrimp, while the difference in the rates for India and Thailand was only 8 percentage points.

 

"It is not yet clear whether Thailand has an export edge, even though we are subject to the lowest penalty rate. Rather, it will depend on which countries manage their raw material costs the best," he said.