Unlike much of the seafood sector, surimi has enjoyed a surge in demand during the pandemic, as the protein's preference for retail channels meant that it was less affected by the closure of foodservice outlets during the height of national lockdowns.
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However, this rise in demand has taken place alongside a substantial drop in supply from the US Alaskan pollock fishery and in the warmwater surimi fisheries in Asia, sector experts agreed on Undercurrent News' Pollock in the Pandemic: Markets, Production, Trade webinar, which took place on Oct. 28.
Rasmus Soerensen, executive vice president of global sales and marketing at American Seafoods Group, told Undercurrent there was likely to be less pollock production in the key state of Alaska, both during the current B season and over 2020 as a whole.
"So right now, we're in a situation where we have very light inventory levels of surimi raw material anywhere in the world, and with less supply coming into the market," said Soerensen. "We're going to start 2021 with tightness in that market, and that's going to be with us for a little while."
Although there had been an initial drop in demand for surimi in the European market at the onset of the pandemic, this had been chiefly down to the preference of retailers for frozen over chilled products.
However, after many surimi producers quickly made the switch back to frozen supply, demand was boosted "relatively quickly after the pandemic hit", Soerensen said. "Overall, surimi is faring quite well from a demand standpoint. The real challenge right now is on the supply side."
US production of pollock surimi has been over 200,000 metric tons in previous years but looks likely to be under 180,000t in 2020, looking at the latest catch data. In previous years, Pascal Guenneugues, a surimi industry veteran and CEO of Future Seafood, has estimated Asian warmwater production to be around 800,000t.
On the Undercurrent panel, Guenneugues said 2020 production will also be down, however.
Serious shortage of high-grade supply
It's important to note that this supply shortage is not equal across grades of surimi. According to Jens Peter Klausen, CEO of Nippon Suisan Kaisha-owned pollock supplier J.P. Klausen & Co, there may even be a slight oversupply of lower grade surimi at present, as the production of smaller fish has been strong once again this year.
"That really goes for Japan as well, the Hokkaido fishery has two pretty good years in a row," Klausen told Undercurrent. "But the fishery only produces low-grade surimi. So in terms of imports, the Japanese businesses have been looking to the Alaskan pollock supply -- so we see a huge demand for high grades."
This is becoming a real problem, as the key European surimi market has a much greater demand for higher grade product.
Guenneugues confirmed Klausen's outlook, noting the output of high-grade fish for surimi in key Asian-producing countries -- China, Vietnam, Thailand and India -- had suffered another successive year of harvest drops (see a clip of Guenneugues discussing the issue below).
"Thailand has got to such a level that it cannot go down further," Guenneugues told Undercurrent. "It is down to 50,000t and is pretty stable. As a reminder, Thailand was producing 150,000t 15 years ago."
Vietnamese production, he said, had remained stable, yet a greater percentage of landings have been taken up by dark, lower quality fish rather than the high-quality threadfin bream, otherwise known as itoyori. "There is a deficit of high-grade surimi, definitely. Vietnam is not a producer of high-grade surimi, but even in the medium grade, there is a problem."
In India, 2019 had already seen a significant drop -- down by as much as 20,000t -- in surimi production, and Guenneuges confirmed that 2020 had followed the same trend, if not worse.
Lastly, Chinese production was low during the initial outbreak of the COVID-19 pandemic, but was also hit by flooding in subsequent months. This has likely affected the production of silver carps, which Chinese surimi producers typically mix with lower-grade fish to create high-grade surimi, Guenneugues said.
"The problem for carp this year is the flooding that they had in China. I think it was in the spring, and everybody predicts that the numbers will be lower [as a result]."
On top of all this, the Future Seafood CEO said, there has been "practically no B season" for Pacific whiting in 2020, another key species used in the production of high-grade surimi.
"Adding to the deficit of pollock surimi, you have a deficit of Pacific whiting and a deficit of itoyori in Southeast Asia. We are getting into the high season, and where is surimi available? Nowhere."
For the US B season, pollock surimi production is down 18.5% to 86,100t, according to the latest data through Oct. 10. Surimi is down 16% to 166,320t for the year, so a drop of 32,830t y-o-y. The season ended on Oct. 31, but more recent data is not yet available.
Season A to the rescue?
According to Guenneugues, many Japanese buyers are currently struggling to feed their factories over the end of the year, with many looking hopefully to the first Alaskan fishing season of 2021 for a boost in supply.
However, the industry veteran admitted he was very skeptical about the likelihood of a recovery in high-grade supply any time soon.
"Surimi production in Hokkaido is over, and they have moved to the Sea of Okhotsk and the Pacific Ocean, but there is no catch and no production there," he explained. "So when you look at inventory in Japan at this time, it's basically at a record low. We are back to the same record low we had in 2017/18."
"Personally, I see the surimi market as very hot, and getting hotter and hotter in the coming months, especially for high grades."
For US lower grades -- equivalent to medium-grade surimi in Southeast Asia -- "the market is more or less balanced," Guenneuges said.
"And when you go down to the lowest grades, I can say we are in a situation of overproduction, because the quality of fish landed in Vietnam, in India and in China is getting worse and worse, and the fish is much smaller."
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November 06, 2020 at 03:45PM
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Drop in US, Asian surimi production comes with global inventories already low - Undercurrent News
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