Gustafsson also objected to the labeling of Russian fish as 'Alaska pollock' in Europe

US pollock producers forced to cut surimi output

After pausing the sales process due to challenging market conditions, American Seafoods CEO Gustafsson said he sees the climate improving by 2025, with surimi as the main target.

The CEO of American Seafoods Group (ASG), the largest Alaska pollock processor at sea, said US pollock companies have to cut surimi production and focus on building more trade barriers against Russian competitors. Gustafsson said the decision to formally stop selling ASG comes amid a very difficult surimi situation and falling fillet prices, and given the volume, it doesn’t take long to see a strong recovery. Given the current pollock climate, Beach Point’s bid is believed to be in the region of $1 billion. Gustafsson made some general comments about believing this will recover and I believe in the long-term value of wild Alaska pollock. The market will recover and within 12 to 18 months it will be back to more normal trading levels.

Surimi 'Price War'

Gustafsson said surimi demand in Europe and the US was improving, but competition from Russia in Asia was fierce. Russia’s Russian Fishery Company (RFC), which held the pollock quota and was the country’s largest surimi processor last year, was wary and was targeting close to 200,000 tonnes, but the best course of action was to reduce production and erect trade barriers, he said.

The CEO recently met with US Senators Dan Sullivan and Lisa Murkowski, both Alaska Republicans, in Washington, the first time he has done so in the US capital, as part of this effort. Gustafsson also joined Sullivan, Murkowski and two Maine lawmakers in calling on the Marine Stewardship Council (MSC) to remove Russia from certification, a move that drew sharp criticism from the pollock catchers’ association. In addition, Gustafsson welcomed the inclusion of anti-Russian seafood language in the statement issued after the recent G7 meeting in Italy. The UK, too, has imposed an additional 35% tariff on whitefish imported directly from Russia, but so far there is nothing to prevent double frozen fillets using Russian headed and gutted fish from being processed at zero tariffs.

ASG and other US companies are being hit hardest by surimi because there is nothing to stop Russia from selling to Japan and other Asian markets. The surimi problem for the US seafood industry will only get worse. The RFC forecasts that the Russian industry will produce 81,000 tonnes of surimi by sea and land in 2024, rising to 124,000 tonnes in 2025. By 2028, the RFC estimates that Russia will produce 163,000 tonnes, roughly the same as the US’s usual output. In 2023, the US will produce 195,107 tonnes of surimi. Looking at B-season production through July 13, volumes are down 10% year-on-year to 27,669 tonnes in the Bering Sea. At present, including crop A output, output reached 101,907 tons, down 12% over the same period.

Additionally, U.S. pollock surimi producers are also benefiting from slower spring hake surimi production in the U.S., so producers are substituting a lot of hake surimi for pollock surimi in Europe. Looking at wholesale prices for Alaska pollock surimi in Japan through June, they are up slightly in yen but still down when converted back to dollars.

Looking at the latest US surimi export data through May 2024, prices are falling. The average export price in May was $2,278/mt, down 24% year-on-year. The average export price in May to Japan, where Russia is disrupting US sales even in small volumes, was $2,159/mt, down 26% year-on-year. The average price in France increased in May, but only in very small volumes.

US surimi imports into Europe in the first half of 2024 decreased in volume and value under customs code 03049410. The EU border price in week 27 was JPY 2,200/t, equivalent to USD 2,400/t. In week 7 of 2023, the average EU import price reached Є4,980/t. Looking at Japanese imports of pollock surimi and tropical surimi, prices for both have decreased through March 2024. Although the US still dominates the Japanese surimi market, the average import price for Q1 was just under USD 2,000/t, lower than Russia ($2,287/t) and all warm-water surimi suppliers led by Thailand.

Calls for more trade barriers

In addition to the Russian MSC certification issue and his support for Sullivan and other US senators pushing the G7 to do more on Russia, Gustafsson also laid out a list of various issues to discuss at a recent meeting in Washington to ensure fair markets and stop encouraging Russian aggression, as most of the Chinese pollock entering the EU is harvested in Russia. The US just closed that loophole itself, showing that it can be done. He also objected to the labeling of Russian fish as “Alaska pollock” in Europe.

Source: Vietnam Association of Seafood Exporters and Producers (VASEP) | Translated from original in Vietnamese

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