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Current Position:Home » News » Agri & Animal Products » Meat & Seafood » Topic

China’s tilapia price rebound draws aquaculture giant to invest

Zoom in font  Zoom out font Published: 2014-02-19  Views: 18
Core Tip: A turnaround in the country’s tilapia pricing has brought one of China’s biggest aquaculture firms to ramp up its tilapia breeding and processing capacity.
A turnaround itilapia breedingn the country’s tilapia pricing has brought one of China’s biggest aquaculture firms to ramp up its tilapia breeding and processing capacity. Known more for its prawn production and processing, Zhanjiang Guolian Aquatic Co. is ramping up its tilapia seedlings business in a large new facility that has come online in Wuchuan, in the company’s home province of Guangdong. This follows a greatly improved performance by the Chinese tilapia sector in 2013.

Tilapia cultivators were losing money in 2012 as weak demand and disease contributed to a poor outlook. That in turn forced a lot of small aquaculture players to exit the tilapia sector. Interviewed by the local press this week, breeding manager at Guolian’s tilapia base in Wuchuan, Zhao Honglei explained that in 2013 prices grew solidly and demand for fingerlings increased greatly.

“A lot of cultivators exited, they gave up tilapia breeding. There was an enormous fall in tilapia output and a growing gap in supply for processors, so now we are producing tilapia again.”

Data published by the Chinese agriculture ministry shows farm gate prices for tilapia surged from CNY 4.7 (USD 0.77åç, EUR 0.56) per 500 grams (g) (for fish of .5 kilograms (kg) and heavier, a common factory grade) in mid-2013. By the end of 2013 those prices surged to CNY 5.3 (USD 0.87, EUR 0.64) and CNY 5.4 (USD 0.89, EUR 0.65) as factories struggled for a stable supply of tilapia for processing.

Local analysts watching China’s seafood sector have welcomed Guolian’s move into tilapia as a way of insulating the firm against volatility in global shrimp markets.

“The coming online of Guolian’s tilapia breeding project is a good move to spread risk,” explained Wang Fenghua, analyst at Hongyuan Securities, which issued its first ever “buy” rating on Guolian stock in late 2013. The firm had struggled to put a disastrous loss-making year (2012) behind it, explained Wang. He points to a rebound in shrimp demand in 2013 (which negated a 5.76 percent countervailing duty placed on Guolian’s shipments into the U.S.) and predicts the firm will hit profit targets set for 2013 to 2015. He’s betting Guolian’s profits will rise from CNY 86.53 million in 2013 to CNY 118 million and RMB 155 million in 2014 and 2015 — on revenues of CNY 1.92 billion (USD 317 million, EUR 231 million), CNY 2.06 billion (USD 340 million, EUR 247 million) and CNY 2.28 billion (USD 376 million, EUR 274 million), respectively.

While there's clearly optimism about prices for fish, feed costs continue to threaten tilapia volumes. A report in the key producing region of Guangxi province suggests a 20 percent rise in feed costs in 2014. The Xi Jiang Capital News, a daily covering the region, reported how freshwater aquaculture producers are seeing strong demand for tilapia, pangolin and carp, but warns production volumes will be threatened by feed costs. “Aquaculture will decrease in 2014,” warned Li Jianwei, general manager of the Wan Sheng Aquaculture Cooperative, a government backed fish farming group in Guangxi. Local tilapia farmer Liu Jiquan meanwhile explained how his 60 cages produced 500,000 kg worth of fish in 2013. However an average wholesale price of CNY 13 (USD 2.14, EUR 1.56) per fish leaves razor-thin margins. “Demand is good but we’re just about covering costs, profits are low,” Liu told the Xi Jiang Capital News.

 
 
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