According to Vasep.com.vn
Exports increased in February, but not a sign of recovery
According to data from the Association of Seafood Exporters and Producers (VASEP), seafood exports in February reached about USD 662 million, a slight increase of 4% over the same period in 2022 and an increase of 10% compared to January.
VASEP assesses that the export trend in February is more positive than the previous month, but compared to the same period last month, the modest increase of 4% has not yet reflected the recovery trend because in 2022, the Lunar New Year will take place in early February.
Data: VASEP (synthesized US)
In the first 2 months of the year, seafood exports reached over $1.1 billion, down 26% over the same period in 2022. Of which pangasius still fell 38% to $240 million, shrimp down 37% to 350 million. USD, tuna decreased by 27% to reach 113 million USD.
The decline in seafood consumption started from the middle of the third quarter to the end of the fourth quarter of last year because inventories from major consumer markets remained high after the post-COVID-19 boom period. This is reflected in the fourth quarter business results of businesses in the industry.
The trend of seafood turnover decreased, causing difficulties in the consumption of products of enterprises, and a sharp increase in inventories.
Typically, Vinh Hoan – the leading pangasius enterprise, recorded an inventory as of December 31, 2022 of about VND 3,113 billion, an increase of 66% compared to the beginning of the year.
Data: Consolidated financial statements of the fourth quarter of companies (synthesized in the US)
For shrimp exporters, the level of inventory increase seems to be lower than that of pangasius. For example, Minh Phu, inventory at the end of last year was 5,141 billion dong, up 12% compared to January 1, 2022.
Data: Consolidated financial statements of the fourth quarter of companies (synthesized in the US)
The Center for Analysis and Investment Advice of SSI Securities Joint Stock Company (SSI Research) believes that inflation will continue to be a big challenge in the context of slow inventory turnover at seafood importers. The department expects the inventory to be fully cleared around the third quarter of this year with orders starting to be received at that point.
In the current context, BIDV Securities Corporation (BSC) believes that the high base level of 2022 and the decline in demand in the US market will be challenges for this industry.
For shrimp products, BSC believes that the economies of main consuming markets such as the US and EU are forecasted to face many difficulties in 2023. This will negatively affect shrimp consumption demand when shrimp are shrimp. is a high-priced seafood product, and the price of Vietnamese shrimp is 10-15% higher than that of rival countries.
Talking to the writer, Nguyen Hoai Nam, Deputy General Secretary of the Association of Seafood Exporters and Producers (VASEP) said that in the context of high inflation, cheap products will have more advantages in terms of consumption.
Mr. Nam forecast that seafood export might start to recover from the second quarter, but at a slow pace. Currently input costs are high while countries reduce imports because of inflation.
In addition, in the first quarter, there was still a big bottleneck as export orders were cut, businesses lacked cash flow while collecting raw materials from people still had to continue. A lot of debts that businesses have to give to the bank have not been paid because of lack of money.
“The business does not have enough cash flow to pay the debt. We look forward to extending the debt to have cash flow to collect raw materials for farmers and fishermen, waiting for opportunities from the second quarter when China consumes more. Many raw material areas are also waiting for credit capital. If processing and exporting enterprises cannot purchase, the raw material areas may be reduced,” said Mr. Nam.
Expectations that exports to China can offset the decline from other markets
The reopening of China is a catalyst for the industry in 2023. Therefore, revenue from China is expected to partially offset the decline in revenue from the US and EU markets.
Data: VASEP (synthesized US)
After opening, exports to China began to show positive signs. In February, the value of seafood exports to this market increased by 33% to $122 million. Accumulated in the first two months of the year, exports to China reached US$158 million, down 7% over the same period.
The US and EU markets still have not shown signs of recovery in February, so exports are still down 35% and 8% respectively over the same period in 2022. By the end of February, seafood exports to the US reached 164 million USD, down 53%, to the EU down 32%, reaching 123 million USD.
According to Mr. Nam, China is a market that Vietnam’s seafood industry is really interested in, as evidenced by the good growth in export growth in the past 5 years. In which, fresh products account for about 20% (equivalent to 2 billion USD) of the total seafood imports of China.
Data: VASEP (synthesized US)
“This is a piece of cake that we can participate in. The export of seafood to China increased by 33% in February, going against the downward trend in other major markets such as the US and EU as a signal. positive,” said Mr. Nam.
Although there are good signals from China, SSI Research believes that this is not enough to provide a chance for companies to recover profits in the first half of 2023. The reason may be due to the comparative profit level. high in 2022.
“We remain concerned about the level of uncertainty surrounding China’s reopening policies. However, for now, we forecast pangasius companies’ profits to decline in 2023.” SSI Research commented
