Salmon Outlook 2015 – Philippe Barbe – Direct Ocean – Intrafish.

12 février 2015

30.12.2014 14:52  – Dominic Welling

 IntraFish Media: What were the three most significant developments for your business in the seafood industry in 2014?

Philippe Barbe: Atlantic salmon production – We are very involved in this. There was quite a major impact on our business from the strong increase in Chile. Prices went down around 25 percent between late spring, early summer and today. For fillets they were at $9 [€7.40] and now down to $7 [€5.80]. We don’t like markets going down ; it affects our margins in a negative way. Better results for us in the first half when there were stable prices, business was consistent, and margins reasonable, in the second half things were not so good because we buy before we sell a lot of our product. Whatever was not sold by end of the summer we had to put our price down to sell it. This affects profitability.

In Q1 next year there will be some stocks left in Chile they will have to move because of heavy  harvesting at the end of the year. Prices on fresh will go up, as they will reduce harvesting in Jan, Feb, but prices on frozen Chilean salmon will remain at level they are now until inventory is sold out. Prices will go up in Q2 though and be high for all of 2015 and 2016. Production growth will be negative in Chile and there will not be any growth in other parts of the world so there will be a shortage of salmon in 2015, and prices will be strong, as soon as Chileans have cleaned up inventory.

Russia embargo — for us quite positive because as of early August Norwegian salmon prices, which had been really high for 20 months, went down drastically, by around €1.50[$1.80]. This opened opportunities to buy fresh Norwegian and to produce portions for the European supermarket distribution business. As well as fillets at a good price, so for people us, European processors, it was a good opportunity to produce value added products such as portions or smoked salmon at lower prices. Not good for Norway’s production side, but benefited the market.

Horsemeat scandal  – Created an impact on prepared meals business in 2013 and there was some residual impact in 2014. Most of our customers in industry saw volumes go down, but things are starting to pick up now. It’s been a very painful 2014 for the prepared meal industry; it created some kind of suspicion on all prepared meals, not meat lasagne. Most companies are in recovery so in 2015, should come back to a more normal situation.

IF: Looking ahead, what will be the most important developments in 2015?

PB: No growth in world salmon production in 2015 – even  if there is growth it will not be more than 3 percent, which means a shortage. Definitely the world consumption growth is around 10 percent, so if production growth is less than ten, product will be short and prices will be strong.

When prices are strong, the market is stable and we have a consistent margin. We always do better when prices go up. It’s not great when they are way too high- close to €6 ($7.3) – that is a problem, consumption goes down, it is our customers in the industry who hurt and therefore we lose credit insurance on our customers, and it is very unhealthy when it gets that high, but when it’s around €5 [$6.10] it’s a healthy market. When prices fluctuate too too much it is also very unhealthy.

More consolidation – more in Chile than in anywhere else, there is already major consolidation in Norway. I think there will be more in Norway as well though, but you have some real giants there already. In Chile I think there must be around 20-25 producers at the moment, and I think they’ll be down to 15 quite soon, if it doesn’t happen in 2015, it will be the following year.

 

http://www.intrafish.com/news/article1403099.ece

 

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