August 18, 2011

 

Lower price bargains pressure Vietnam's seafood exporters

 

 

More and more European and American importers are asking for lower seafood prices or give up the contracts putting on pressure on Vietnamese seafood exporters.

 

Meanwhile, analysts have predicted worse situation towards the end of the year due to the public debt crisis in Europe and the US.

 

The Tra fish export price to Europe fell by another US$0.02-$0.03 per kilo in the first two weeks of August. The average export price to the market has dropped from US$3.3-$3.4 per kilo in June and July to US$2.8-$2.9 per kilo now. Meanwhile, the average export price to the US has dropped to US$3 per kilo.

 

In fact, the export price decreases have been anticipated, because importers have been well informed that the domestic material prices have decreased by 20% from the beginning of the year, and have tried to force the prices down.

 

However, the price decrease proves to be not the biggest headache for Vietnamese exporters now. What most worries them now is that a lot of importers have broken the contracts, while many others have asked for delivery delays.

 

"Some European importers informed the cancellation of Tra fish import contracts in the first two weeks of August, reasoning that they do not have money to make payment," Director of a Tra fish export company in Dong Thap Province said.

 

Meanwhile, the sale has been going slowly in the consumption markets, since consumers now have to fasten their belt.

 

Enterprises complain that they have to pay high for storing, VND1,425 (US$0.0685) per kilo, which includes the bank loan interest rates, electricity, etc.

 

The Russian government is carrying out a solution package to stabilise the domestic seafood market, having setting up stricter conditions aiming to reduce the seafood imports. In the first quarter of 2011, the seafood imports to Russia dropped by 32%. Analysts have warned that the new policy would have big impacts on Vietnam's Tra exports.

 

To date, some ten Vietnamese enterprises have been licensed to export about 5,000 tonnes of Tra fish to Russia.

 

According to Duong Ngoc Minh, General Director of the Hung Vuong Seafood Company, Vietnamese enterprises should keep cautious and not to try to export products at any costs. He said that a lot of importers have fallen into insolvency, and if Vietnamese enterprises venture to sell products to them, they may not fail to get payment.

 

Saigon Tiep Thi has quoted its sources as saying that some Vietnamese big shrimp and Tra fish exporters are likely to lose hundreds of billions of dong worth of exports, because the importers still have not made payment.

 

"In the context of the input cost increases, businesses should be keep cautious and require the safe payment methods to avoid losses," Linh said.