Pangasius facing high inventories and prices

Pangasius is one of the seafood products with the most substantial decrease in export value. Sharing at the international conference on the pangasius industry organized by the Vietnam Association of Seafood Exporters and Producers (VASEP), Le Hang, Communications Director of VASEP, said that by the end of July 2023, Pangasius exports only reached US$ 1 billion, down 37% over the same period in 2022.

According to VASEP Deputy Secretary General - To Tuong Lan, based on the 7 months of 2023, there is no clear sign of recovery for the pangasius export market in the following months.

The unusual point is that it is not the purchasing power but the orders from partners that are very few in all markets, especially the US and China markets.

Regarding the export price of pangasius, To Tuong Lan said that although in the second quarter of 2023, export pangasius had a price improvement compared to the first quarter of 2023, the export price still went in a horizontal direction. Accordingly, in June, the average price of pangasius exported to the US reached US$ 3.5/kg, down 21% compared to June and continued to decrease by 4% compared to May.

Notably, the price of pangasius in China is also decreasing at US$ 2.2/kg, down 13% compared to June and 5% compared to May 2023.

Besides, there is an important reason that pangasius inventories are still significant in some import markets. The reason is that in the first half of 2022, after coming out of COVID-19, the world economy showed signs of recovery, leading to massive importers of pangasius with the expectation that sales would increase sharply in the second half of 2022. However, in the second half of 2022, for many reasons, the market situation was not as expected, making pangasius inventories very high, and this situation lasted until the first half of 2023.

Not only inventories at importers but exports plummeting is also causing pangasius stocks in the country.

According to Ong Hang Van, Deputy General Director of Truong Giang Fisheries Joint Stock Company, due to the decrease in export demand, a large amount of pangasius in the pond exceeded the standard weight of 900 grams-1 kg to 1.5 kg. This causes the inventory to increase in the coming time, causing the business's cash flow to be congested.

The high production cost of pangasius also makes it more difficult to export. Van said that in previous years, the cost of raising raw pangasius was equivalent to US$ 1/kg. In the past time, the price of pangasius feed has increased significantly, from VND 10,000/kg before the COVID-19 epidemic to VND 13,000/kg. The feed price increases the feed structure in the cost of pangasius farming from 55% to 75%.

Currently, the price of raw pangasius is US$ 1.2/kg. Meanwhile, the selling price for some places is only US$ 1.1/kg. As a result, farmers alone lost 10 cents/kg without considering the processing costs of factories. Also, with a US$ 1.2/kg price, it is difficult for pangasius to compete with other fish, such as pollock, in the world whitefish market.

To reduce the price of pangasius, Van said that pangasius businesses should sit together to balance the crop for next year, which can be harvested in the second quarter of 2024. Each enterprise has its measure, but overall, it reduces stocking density, avoids diseases, increases weight quickly, and keeps the feed conversion ratio ('FCR') for 1 kg of fish low, helping keep pangasius farming costs low.

Van emphasized: "We must try to reduce prices by reducing fish mortality and feed costs. The fish mortality rate is still too high, up to 60%, due to the environment. Most pangasius hatcheries are not strictly controlled; many facilities abuse antibiotics, causing the breed to become weaker and degenerate."

Le Hang said exporting pangasius in the third quarter will still be difficult. The low export price of pangasius is a potential risk of reducing business profits. However, pangasius export prices in the year's second half are still expected to be higher than in the first half, and demand from the Chinese market will gradually increase. It is forecasted that 2023 pangasius export turnover could reach US$ 1.7 billion, down 30% compared to 2022.

Ong Hang Van said businesses need to try to overcome the remaining 5 months of 2023 before entering a more stable period in 2024. The current solution is to reduce inventory and farming output harvested in the second quarter of 2024.