June 22, 2012

 

Just three salmon firms maintain share value

 

 

According to a report by DNB Bank, several Norwegian and Chilean salmon companies have suffered up to 50% of losses over their value in the stock market in 2011, with the exception of AquaChile, Marine Harvest and Cermaq.

 

The three companies have maintained their values, Diario Financiero reported.

 

According to the Norwegian bank, following this significant drop, it is expected that salmon price stabilises after 2013, thanks to an increased demand for fish and to aquaculture production control in both nations.

 

In addition, a report, created by Stock Exchange Cruz del Sur, states that "long-term fundamentals remain favourable given the growing demand for seafood."

 

"The fact that production in Norway would be close to its maximum potential offers Chile an interesting opportunity to supply this market," the report adds.

 

Meanwhile, the authors of the report from the DNB highlighted the production growth adjustments announced by several Chilean producers, predicting a "strong supply growth outside Chile also in the first half of 2013, which will result in relatively weak prices early next year."

 

According to the head of Chile & Peru corporate finance from DNB, Paul D'Agliano, a way of coping with the current salmon price is to "control growth rates, which does not mean they have to cartelise the industry."

 

Another solution is "the existence of consolidation, as this generates higher-scale economies," added D'Agliano.

 

With respect to salmon price, the Norwegian bank expects that beyond 2013 "the market balance improves significantly," since Norway is close to its capacity level and Chilean production may fall.

 

Both Chile and Norway are looking for new markets for their salmon.

 

Brazil already accounts for 8% of Chilean exports, while Japan accounts for 53% and the US represents 22%, Cruz del Sur explains.

 

Finally, the report by DNB notes that the analysis shows an increase in the demand for fish by the global middle class, "Most of this growth is expected to come from Asia and therefore, it is important that Norwegian and Chilean producers focus on developing this market."