September 29, 2003

 

 

China Fishmeal Market Weekly Report - Substantial Rise Seen in CIF Fishmeal Prices in China

 

An eFeedLink Exclusive Report

 

1.  Market overview

 

A substantial rise characterized the Chinese fishmeal prices for the week ended September 26. While quotations at the major ports in the early part of the week generally increased, transacted prices were also kept high, thereby exhibiting an overall steady increase. Compared to the previous week, transaction prices rose by RMB100-150/ton.

 

At the Shanghai port, 64% protein FAQ fishmeal was still quoted at RMB5200-5250/ton, and transacted at RMB5180-5200/ton. FAQ fishmeal with above 65% protein was quoted at around RMB5300/ton and transacted at RMB5250/ton; while SD66% fishmeal was quoted at about RMB5350/ton. At Huangpu port, fishmeal with protein of above 64% was quoted at between RMB5300-5350/ton, and transacted at RMB5250/ton.

 

Likewise, fishmeal with above 65% protein was quoted at RMB5350/ton and transacted at around RMB5300/ton. At Dalian port, 64% protein fishmeal was quoted at between RMB5350-5400/ton and transacted at around RMB5300/ton. At Tianjin port, 64% protein fishmeal was quoted at RMB5300/ton, and transacted at around RMB5250/ton. Meanwhile, 65% protein fishmeal was quoted at around RMB5350/ton and transacted at RMB5300/ton.

 

2.  Market Supply and Demand

 

Supply:

 

Port inventories of imported fishmeal this week differed little from the previous'. Fishmeal stock arrivals at the port were modest, mainly from loose container shipments. A bulk shipment of over 10,000 tons of fishmeal, which was supposed to arrive at the port this week, has not arrived yet. At present, overall port inventories stand at approximately 155,000 tons. 

 

Demand:

 

Current production of livestock and poultry feed remains in its peak season, ensuring the stable demand for fishmeal. However, with the substantial increase in CIF quotations, port inventories this week is seen to remain largely unchanged. Meanwhile, daily stock departures at the Shanghai port ranged between the level of 500 and 600 tons.

 

3.  Overseas Markets

 

The Peruvian fishmeal market remained basically stable in the previous week. Market prices were generally unchanged, and available inventories were already facing a serious shortfall. While news regarding the lift of fishing ban has yet to be announced, industry insiders firmly believe that the ban will be removed by mid October.

 

4.  Outlook for the Near Term

 

Undoubtedly, the price hikes for fishmeal prices in China this week were mainly a consequence of the joint price raises by the major importers. However, there were also market forces at work. The animal production industry's recent full recovery has spurred an increase in the demand for raw materials for feed production. Moreover, the substantial price increases of soymeal and lysine have played a part to create sufficient momentum to push up fishmeal prices. As a result, it is only logical that fishmeal prices should rise.

 

Nevertheless, market participants are still not very optimistic about a sustained price rise for fishmeal in China for the near future. This is mainly because there are still many factors working against the rise of fishmeal prices in the long term: 

    • Firstly, although Peru has not yet announced its lift on fishing ban, industry insiders foresee that news of the ban lift in mid-October is not likely to release beyond the expected schedule; 
    • Secondly, the costs for the recent fishmeal stock arrivals generally ranged between US$560-570/ton, or RMB5000/ton. Given the ongoing CIF quotations, the margin for profit is already very substantial, posing considerable pressure against the price hikes for fishmeal in the near future; 
    • Thirdly, the huge quantities of locally produced fishmeal, which suppose to hit the market soon, are likely to present a challenge to the consumption of imported fishmeal in the long run; 
    • Fourthly, with the increasingly cold weather, the demand for aqua feed is likely to fall, especially in the northern regions. Fishmeal stock departures at the northern ports have declined significantly of late.      

In short, given that current fishmeal supply in China is highly concentrated in the hands of a few, it is easy to attribute any price changes to market speculation. Furthermore, based on the present overall market situation, market analysts are forecasting that a substantial price increase is not likely, with prices more likely to keep to the present levels.

 

Fishmeal Prices at China's Key Ports:

Date: Ended 26 Sept                                                                                             Unit: RMB/ton

Destination

Origin

Protein

Previous week's price

This week's price

Rise/fall

Dalian port

Peru

64%

5180

5300

+120

Tianjin port

Peru

64%

5150

5250

+100

Shanghai port

Peru

64%

5050

5200

+150

Huangpu port

Peru

64%

5150

5250

+100

 
Remark: Prices refer to port transaction prices.