August 4, 2003



Stable Fishmeal Prices In Peru Market


1.  Peru's fish haul for the two weeks (28 & 29) ending July 13 and July 20 were 84,800 tons and 93,600 tons respectively.  Fishing was mainly concentrated in the coastal regions of Paita and Chimbote.  Compared to the volume of 265,600 tons and 258,900 tons during the same period of last year, these two weeks' fish haul showed a drastic reduction of 180,800 tons (68%) and 165,300 tons (63%) respectively.


As of the end of week 29 (July 20), Peru's cumulative fish haul for this year totaled 3,381,200 tons.  Compared to the cumulative haul of 5,739,640 tons for the same period of last year, there is a drop of 2,358,440 tons, or 41%.


Compared to the later starting date of July 31 last year, the seasonal winter ban on fishing of anchovy started earlier this year, from July 21.  For the period from January 1 to the day before commencement of the fishing ban, Peru's cumulative fish haul for this year showed a drop of 2,620,000 tons, or 43.66%, over last year's cumulative haul of 6,000,000 tons. 


Although the southern part of Peru has not been included under the ban, the haul from this area is negligible.  While there is no official stipulation of the date for lifting of the seasonal winter fishing ban, there is general speculation that the ban for this year will last till end October (last year's ban lasted till November 2, 2002).


2.  With commencement of the winter fishing ban, Peru's FAQ fishmeal market started to show some activities.  A Chinese buyer made an early entry into the market by purchasing around 10,000 tons of the August-September shipment at around US$550 /ton (FAS), providing some definitive price support. 


However, there were little buying activities from other foreign buyers, with European buyers watching mainly from the sideline.  Although there were some attempts by traders to push down prices in the market, they were generally unsuccessful.


According to market sources, on the Friday of Week 29, some Iranian buyers reportedly bought 11,500 tons of FAQ fishmeal at US$560 /ton (FAS) from the ports of Paita and Chimbote.  However, completion of this transaction is yet to be confirmed.


Market statistics indicate that since the start of the fishing ban, a total of 12,000 tons of S/D fishmeal had been transacted, to be delivered mainly in containers.  Most of the buyers were from Japan, Taiwan and other Southeast Asian countries.


The Peruvian fishmeal market is expected to remain relatively stable in the near term, with little price fluctuation. 


3.  Despite earlier forecasts of a downward trend in fishmeal prices, since December 6 last year, prices of fishmeal in the China market increased steadily in tandem with rises in international fishmeal prices; moving from a low of RMB3800 /ton (normal quality at RMB4200 /ton) to RMB5600 /ton in June this year, registering an increase of 33% or RMB1400 /ton over the 7-month period.


Recently however, following the disappearance of the international price bubble, coastal prices of fishmeal in different parts of China also fell by RMB100¡§C200 /ton, a drop of around 3%.


Given that this is the onset of high demand period for fishmeal, plus the drastic decline in fishmeal supply this year, and the fishing ban in Peru which would curtail any downward movement in international prices of fishmeal, the recent fall in fishmeal prices in China raises some questions which merit examination by fishmeal traders and consumers:


Is the fall in prices caused by profit-taking sale of fishmeal by some Chinese traders? Or is the fall a temporary price correction before the next round of increases? Or does this fall in prices signal the start of the "downward spiraling" of fishmeal prices which was forecast by some industry players over the last six months?


All said, markets do not generally move as favorably as wished by some market participants, nor act as negatively as forecast by others.  Based on current market indications, fishmeal prices in China are seen to remain relatively stable amidst rising demand.


Source : Coland Group, China

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