What to expect in 2018?

December 28, 2017

The year end is both the time to reflect on the year passing and to look towards the new year. We like to do the same and point out some of the noticeable events in 2017 as well as make some predictions for 2018. Here are some of the issues that we find worth mentioning without raking them in importance.

Brexit. We have been eagerly following the negotiations and speculating on what the impacts will be on the seafood markets. Following Brexit UK will get control over its fishing waters and there will be some changes in the flow of seafood through the UK to the EU markets and the potentially to the processing in the UK. Even though the UK will get control over its own waters that doesn't mean that the UK will get a free ride on how to act. The fisheries management of joint stocks will have to be considered. Issues surrounding tariffs, non-tariffs, and red tape will have to considered in the flow of seafood to and from the UK. Any obstacles will have an impact on the trading routes. The processing sector in the UK relies to a large extent on raw materials from abroad. Maintaining the flow of raw materials to the UK for the processing sector will be a challenge.
Waiting for the Canadian cod. Since a moratorium was placed on the catch of the Atlantic cod in Canadian waters due to the state of the stocks harvesting companies and processors have been waiting for the signs of recovery. But after nearly a quarter of a century of waiting the landscape is significantly different. Should the Atlantic cod appear again in Canadian waters in large quantities there will be the need for significant investment and restructuring of the industry. To do that capital is needed. The question is then where will the capital going be coming from? We can expect that some proposals for government money will be put on the table in 2018 to start the process of restructuring the Canadian Atlantic cod fisheries sector. The access to private funding will be conditional on what rules will be put in place in terms of the access to the stocks and how the private companies can recover their investment.
Salmon knowhow to whitefish. We have talked about the investments of the salmon companies, primarily from Norway, into the whitefish sector. We would expect this trend to continue as well as we will start to see some of the benefits from the knowhow in salmon filtering down to the whitefish sector. There we are not only looking at the distribution and logistics benefits but also the expertise of the salmon companies when it comes to market knowhow and understanding the customer demand by providing innovative products.
Lower prices for salmon. This passing year started well for the salmon producers with average prices close to NOK 80/kg. Now it looks like that the party is over and 2018 will see significantly lower prices for salmon. We would expect this to have an impact on the stock prices and valuation of the salmon companies. In that regard the outlook for the sector is negative and prices will continue to fall in 2018. The key to this are the global supply growth projections for the sector which will remain higher than in the last 3 years.
More seafood to China but less H&G. The Chinese appetite for seafood will continue to grow in 2018. However, this doesn't mean though that more H&G whitefish will be exported to China for processing. The shift to keep the processing closer to the source will negatively impact the processing sector in China as companies in processing will invest in new technology to try to automate and shorten the time it takes to process for the final consumer. Companies in the technology sector will benefit from this in 2018 with more investments in processing technology such as water cutting.

The Seafood Intelligence team will continue to follow these stories in 2018 and update all figures behind our analysis on markofish.com. For further information contact us at info@markofish.com.