Inflation is the main reason leading to the sharp fall of Vietnam's pangasius exports to major markets. However, pangasius has witnessed good signals even in markets suffering from high inflation.
In January 2023, pangasius exports fell deeply by 61% over the same period last year, reaching only US$84 million.
According to Ms. Le Hang, communications director of the Vietnam Association of Seafood Exporters and Producers, food and fuel price inflation have most strongly affected low-income households, making them limit spending even with reasonably priced foods such as pangasius. In addition, the objective reason for the decrease in exports in January was due to the Lunar New Year holiday this month, and seafood processing factories had to stop production for 7-10 days.
Therefore, pangasius exports to most of the main markets decreased by 30-60% compared to the same period last year. In which, the leading pangasius exporters all experienced a huge decrease in sales, from 40-57% compared to January 2022. In which, Vinh Hoan and IDI Corp both decreased by 57%, Van Duc Tien Giang decreased by 55%, NAVICO decreased by 47% and GODACO decreased by 40%.
Among export markets, export turnover to the US market decreased the most, down 81% to only US$10 million. Although seafood has much lower price inflation than other foods in the US, consumption is still depressed. A recent survey found that 96% of Americans are affected by inflation, of which 50% are heavily pressured by inflation.
In 2022, the US imported 129,000 tons of pangasius from Vietnam, up 21% in volume and 74% in value compared to 2021 due to a 53% increase in prices.
Pangasius exports to China and Hong Kong decreased by 62% to only USD13 million in January 2023. The long Lunar New Year holiday coincided with the China border reopening policy after the Covid -19 blockade, many families traveled and ate outside, so the import activity and the demand for pangasius consumption were also partially affected.
However, this market is showing signs of improvement, especially after the recent conference to promote trade in agricultural and seafood products between Vietnam and China. Recently, China has stepped up to buy pangasius in large quantities, pushing up fish prices. As a result, domestic raw materials inspection skyrocketed from 28,000 VND to 31,000 VND/kg.
According to Ms. Le Hang, in 2022, Vietnamese enterprises exporting pangasius to China and Hong Kong markets reached US$712 million, up 58% compared to 2021. The two main product lines exported to China have frozen pangasius fillets (HS code 030462) accounting for more than 74% of the value with US$531 million and frozen butterfly split whole pangasius (HS030324) accounting for over 25% with nearly US$180 million.
The above signals of the Chinese market will open up more opportunities for Vietnamese pangasius exporters. Among the import markets of Vietnamese pangasius, China attracts the largest number of export enterprises. As of the beginning of December 2022, there were more than 160 Vietnamese enterprises exporting pangasius to China.
The top 5 pangasius exporters to China include Dai Thanh Co., Ltd., Truong Giang Seafood Joint Stock Company, I.D.I Multinational Development and Investment Joint Stock Company, Import-Export and Processing Joint Stock Company Cadovimex II Seafood and Go Dang Joint Stock Company.
In general, these companies do not have much difference in sales, accounting for 6-7% of pangasius export value to this market.
Le Hang said that inflation makes low-income consumers tighten their spending, however, in fact, such markets with high inflation have facilitated Vietnamese pangasius exporters to accelerate revenue, especially in European countries such as the UK, Germany, Romania, Poland, Chile, which are suffering from high inflation of 7-11%.
Specifically, in January 2023, while exports to other countries all declined at a double-digit rate, exports to Germany increased by 78%, to the UK only decreased slightly by 2%, and to Romania increased by 310%. Despite only increasing by 4%, Singapore is also on the rare list of markets with positive growth in imports of Vietnamese pangasius in the first month of 2023.
It is forecast that in the first quarter, there is unlikely to be any changes after many months of demand declining due to inflation. However, exports are likely to recover from the second quarter of 2023 thanks to China's adaptation to the new context and Vietnamese businesses' participation in international seafood fairs in March and April to search for more contract opportunities.
In fact, there is a bounce back of China market with more demand along with the increase of domestic raw materials prices, but it is difficult for businesses to buy raw materials because fish are oversized for export. Therefore, it is important for businesses to actively prepare raw materials to catch opportunities from the market.
Read more: Seafood Industry Report
SEAFOOD INDUSTRY REPORT 2022 & OUTLOOK 2023