The 6th IFFO/JCI Fishmeal and Fish Oil Forum was held in Wuzhen City (China) on March 22nd 2019. It was chaired by IFFO China Director Maggie Xu and kicked off with a presentation by IFFO Market Research Director Dr Enrico Bachis.
The programme covered a wide range of topics, focusing on both Chinese trade discussions and the latest global trends, with hot topics including: a) Fishmeal and Fish oil Supply/Demand and Outlook (Dr. Enrico Bachis, Market Research Director, IFFO); b) Climate Condition Change and Anchovy Resources Outlook in Peru (Mrs. Diana Guzman Vega, Commercial Manager, Pesquera Diamante S.A); c) China Fishmeal Supply/Demand in 2019 and Business Strategy Analysis (Mr. Hansen Lee, Vice President, Coland Holdings Co., Ltd); d) China Local Fishmeal Production and Outlook for 2019 (Mr. Liangxiao Guo, General Manager, Rongcheng Gedi Marine Biological Technology Co. Ltd.); e) JCI’s Way of Fish Resources Projection: A case study of remote-sensing and model prediction applied on fishmeal market analysis (Mrs. Denise Xu, Senior Analyst, Shanghai JC Intelligence Co. Ltd.).
You can now access the presentations on the Members' area of the IFFO website.
Fishmeal and Fish oil Supply/Demand and Outlook
During his presentation Dr Enrico Bachis estimated that the year 2019 is expected to still provide around 5 million mt of fishmeal and 1 million mt of fish oil. However, total supply should be below 2018' levels. As things stand now Peru is not expected to repeat the buoyant production of 2018, mainly on the back of the weak El Niño, which seems to be affecting the Peruvian coastline. The Northern-European fisheries are also expected to fare less positively than in 2018, with the serious risk of not having any capelin quota.
Climate Condition Change and Anchovy Resources Outlook in Peru
Mrs Guzman updated the delegates on the current climate situation along the Peruvian coastline. She mentioned that in the north of the country there is no strong entrance of equatorial waters, while from the west side there seems to be a displacement of oceanic waters that could fold the anchovy near the coast. This is something to watch closely as it would hamper fishing operations of the industrial vessels, which are not allowed to fish within the 5 miles from the shore.
China Fishmeal Supply/Demand in 2019 and Business Strategy Analysis
In his contribution Mr Lee covered several factors affecting the fishmeal market: the sea temperature of the Peruvian coastline; historical quotas; China fishmeal supply and demand; exchange rate and African Swine Fever (ASF). He also focused on the potential impacts of the ocean conditions on the Peruvian forthcoming fishing season, but he made a point on the “ASF”: Chinese hog and sow inventories have been affected in the first quarter of 2019, but he does not believe the impact on pig feed consumption, and thus on fishmeal demand from the pig sector, will be greatly affected this year.
China Local Fishmeal Production and Outlook for 2019
Mr Guo on the other hand reported that China’s fishmeal production increased in 2018 with respect to the year 2017. The production growth was mainly reported in Guangdong, Guangxi, Hainan and the Shidao area of the Shandong province, thanks to the increase in the raw material supply in the last quarter of 2018. In his opinion the Chinese fishmeal plants have managed to adjust to the new stricter Environmental Protection Policy, which caused a resizing of the operations in the Shandong province back in 2017. The most controversial part of this exposition was the staggering number Mr Guo presented for the annual production of fishmeal in China: 875,000 mt. This goes against all other estimates offered by other international and domestic organisations and analysts, although the speaker justified his own estimate as due to the big local production of shrimp meal. A final point of the presentation was related to the fact that the local fishmeal producers are actively promoting the revision of the national standard for fishmeal.
JCI’s Way of Fish Resources Projection: A case study of remote-sensing and model prediction applied on fishmeal market analysis
Hanver Li, Chairman of JCI, as usual closed the event with a summary of the main take-aways and some insights on the market. Among his observations one was that although the inland aquaculture farm areas of fresh water in China have decreased in recent years, China appears to have been able to solve some technological problems on offshore aquaculture. The marine farming could thus provide more than 50% of meat protein growth in the future. Another highlight was on the prices of Chinese aqua products: they remain relatively cheap due to the ample supply, and this is expected to subdued the growth of aqua feed production in 2019. Finally, he mentioned that the future development of the fishmeal inclusion rate in pig feed will be decided by the profitability of the sector. Meanwhile, the rapid development of large-scale breeding farms so far has clearly brought more demand for feed and fishmeal consumption, although on a reduced stock.
IFFO’s views of the Chinese fishmeal and feed productions
Taking advantage of the trip to Eastern China, IFFO had a series of meetings with local institutions and companies. Visits were paid at Zhejiang Feng Yu Marine Biological Products Co., Ltd. in Zhoushan city, a feed plant in Shaoxing city that is part of the Haid Group, and a feed plant in Jiaxing city that is of Yuehai Group, all of which are located in the Zhejiang province.
It was a good opportunity to better understand the Chinese fishmeal and feed productions, with special focus on fishmeal and fish oil inclusion rates in different diets. Among other things we got confirmation of the fact that the inclusion rates in premium feeds range between 20% and 30% for fishmeal, and around 5% for fish oil. The visits to shrimp farms also confirm that farmers prefer feed with a high content of fishmeal and fish oil as they produce better conversion rates. Substitution remains thus very difficult for certain species.
Farmers have started the shrimp fingerlings stocking in shed with boilers at the end of March, while it would be started in open pond in May due to more than usual heavy rains and the lower temperature registered so far. As coal-fired boilers for shrimp shed farms have been prohibited under the new environment protection policies, the shrimp farm area in Eastern China is further reduced, while large-scale breeding farms in the North of China have been forced to just one stocking season between May and August.
According to the local feed producers met during this field trip, China produces around 98 million tonnes of pig feed per year, 20/25% of which is for piglets, the main swine segment that consumes fishmeal. The ASF epidemic appears to have affected the intake of marine ingredients by the piglets feed industry, whose consumption of fishmeal is estimated now at around 600,000 metric tonnes per year. Estimates for the year 2019 currently range between 560,000 and 600,000 tonnes, but we got the impression that even for the Chinese is difficult to factor in all the different variables that might drive the consumption this year.
China’s aquafeed production is estimated at around 20 million metric tonnes, and remains the main consumer of marine ingredients at around 1.7-1.8 million metric tonnes per year. There seems to be still too much uncertainty on the direction the aquafeed industry will take in 2019, although there seems to be consensus on the fact that even if some growth had to materialize, this would be subdued due to the oversupply in the aqua products market.
The outcalls not only further improved IFFO’s communication with current members and understanding on the latest market dynamics but also generated new IFFO leads. Similar trips are to be planned and conducted regularly in the future.
Drafted by: Meng Wang, China Market Analyst
Approved by: Maggie Xu, China Director & Enrico Bachis, Market Research Director