EP 550 | AIRED 08/09/2021
China Update: Freight Rates Are Rising; COVID-19 Outbreaks Causing Major Delays
August 9th, 2021--- This week we provide a China update as freight rates continue to rise, and COVID-19 outbreaks continue to delay production, and how pricing won’t be the main concern for the remainder of the year.
--- Freight rates to North America continue to climb with no end in sight.
Processing Plants in China were told by shipping agents that freight rates are to exceed $30,000 to North America in August and September.
Rates are forecasted to climb even higher when Chinese New Year closures start happening near the end of January 2022 and is anticipated to happen because demand in both the EU and North America are to be even stronger by then.
Recent COVID-19 outbreaks in Nanjing airport were reported recently, with almost 200 cases in 9 cities, all related to Nanjing airport.
The number 1 cold storage at Yidu was supposed to reopen this week, but the re-opening will be delayed again due to 2 news cases.
With COVID-19 cases on the rise at major China ports such as Dalian, the thoroughness and harshness of Chinese Port Authorities upon detecting COVID-19 will only further delay production and shipping.
In what has been another tough year for both buyers and sellers - sellers are struggling to survive and buyers are having to pay higher prices.
We were told by the owner of a large processing plant in China that they believe the seafood business in China will go through a drastic change this year.
Their recommendation to buyers is that they secure everything they can, as supply will be a big issue for the remainder of the year, overshadowing pricing as the #1 concern.
--- As for the current state of raw materials in China, supply is scarce and pricing is up.
For Pacific Cod, pricing keeps moving on its upward trend as supply is very short.
Russian longline caught just hit $4300 per metric tonne (or $2.00/lb USD) - this is up from $4000 per metric tonne just last week.
Alaskan Longline would be $500 per metric tonne more expensive - if there was even any more supply available.
--- Now moving onto the state of raw materials pricing in China.
The trend we are seeing with more and more buyers in EU and North America is that they want to buy Russian Cod for further processing because freight rates have gone up so much.
One of the top 2 Cod packers in China advised us their Cod production will have to stop until they receive new raw materials - which they are unsure about when they will arrive.
For Flounder, pricing is getting stronger as the price jumped from $1450 per metric tonne to $1600 per metric tonne (or $0.75.lb USD) for M size.
Flounder supply in China is short as it is hard to get raw materials into China.
For Haddock, plants have started to receive fish, but mostly small sizes, under 800g.
For Russian Halibut, the harvest is not performing well right now in Russia.
As Halibut is caught as bycatch when catching Cod, when Cod is short, Halibut will be short as well.
Our recommendation echoes what we mentioned earlier and that is to secure everything you can as supply will be a big issue for the remainder of the year.
Contact your Tradex Food representative this week to see how we can get the products you need.
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