Softer prices for tuna are being blamed for weak earnings at one of China’s leading deepwater fishing firms. China Overseas Fishery Co., (COFC) published a performance alert stating that it was expecting a net loss of CNY 13 million (USD 2.1 million, EUR 1.6 million) for the first half of 2013. Net profits in the first half of 2012 by contrast totaled CNY 18.65 million (USD 3.04 million, EUR 2.3 million). The Shenzhen listed firm blamed falling prices for tuna and squid both of which, it claimed, decreased by 20 percent in the first half of this year. Increased competition for squid in Latin American waters was also cited by the firm as pushing down the average squid haul by its vessels.
Government subsidies will cushion COFC somewhat. The firm got CNY 32.8 million (USD 5.35 million, EUR 4.04 million) in subsidies from China’s government in the first half of the year, a decrease of 31 percent compared with CNY 47.8 million (USD 7.8 million, EUR 5.89 million) received in the same period in 2012. However, on 24 July the firm received a boost in the form of a CNY 10.45 million (USD 1.7 million, EUR 1.29 million) diesel subsidy from the fisheries bureau of the department of agriculture.
Overseas-focused firms like COFC have become a focus of government efforts to expand the domestic fisheries industry, with fuel and vessel building subsidies encouraging firms to enter the deepwater sector.
A dramatic improvement in China’s deep-water fishing capacity over the past decade has been credited to government subsidies as well as a surge into the sector — previously dominated by state owned or controlled companies — by largely privately owned firms like Shanghai Kaichuang Marine International Co., Ltd, which is set to disclose its results for the first half of 2013 results on 23 August. The Shanghai listed firm made net profits of CNY 129 million (USD 21 million, EUR 15.9 million) in 2012, up 96 percent year-over-year, boosted by increased fishing output and strong price growth for tuna fish.
Kaichuang caught 90,000 metric tons (MT) in 2012, a year-over-year increase of 23 percent. Margin from sales of tuna was 35.7 percent while margins from its other business lines were all negative. Tuna contributed 42.7 percent of its total sales, while mackerel and fish fillets accounted for 36.9 percent and 8 percent, respectively. Kaichuang’s tuna seiner fleets fished 55,292 MT, a year-over-year increase of 15 percent. Average output per ship at 6,144 MT was up 12 percent year-over-year. A 2012 haul of 47,505 MT of tuna was sold at an average price of USD 1,665 (EUR 1,256) per ton, generating sales income of CNY 497.79 million (USD 81.3 million, EUR 61.3 million).
A sign of the profitability of deep sea fishing, Kaichuang only entered the sector in 2009, having previously focused on sales of engines, as well as automation system for power facilities. Almost 73 percent of Kaichuang revenues of CNY 593.9 million (USD 97 million, EUR 73 million) (up 12.1 percent year-over-year), with the rest — including a “very small” small portion of tuna and krill output — going to domestic clients. Kaichuang last year got 20,374 MT of a total 90,000-ton catch from new fishing areas in West Africa and North Pacific. Expansion of boat capacity continues at some of China’s other leading deep-sea fishing firms. Shareholders of Shandong Zhonglu Oceanic Fisheries Co. recently voted to approve the building of two new purse seiner vessels.
Under its current five-year plan for fisheries, China plans to have 2,300 deep water vessels in action by 2015, up from a current 2000. While officially committed to reducing its domestic fishing fleet, China has been keen to ramp up its deep-water presence, a development that has worried some. In a paper on China’s deep water presence presented at the EU Parliament in Brussels last year, EU officials estimated Chinese vessels account for 10 percent of the global deep water catch and claimed that USD 9 billion (EUR 6.79 billion) was being lost to other nations by illegal fishing by Chinese vessels. According to EU estimates China’s deep water fleet fishes 4.6 million tons a year, far higher than the 380,000 it reported to the Food and Agricultural Organization (FAO) in 2011, with 3.1 million tons coming from the Africa region.
