Indian supply recovery may hamper growth of Vietnam shrimp exports in 2021
Vietnam’s shrimp exports will be the main growth engine of the seafood sector this year.
A recovery in Indian supply after Covid-19 may hamper growth of Vietnamese shrimp exports in 2021, according to SSI securities corporation (SSI Research).
Vietnam’s shrimp exports will be the main growth engine of the seafood sector this year. Photo: vcci.com.vn
Major shrimp exporting countries like India, Ecuador and Thailand suffered heavily from the impacts of Covid-19 last year, Indian shrimp production was estimated to drop by more than 20% in 2020, according to Undercurrent News.
Due to the short cycle of shrimp farming (only 3-4 months), the competition between Vietnam and India in the US and EU, which currently contributes 37% of the export value of Vietnamese shrimp, is predicted to become more intense in the second half of 2021.
The Vietnam Association of Seafood Exporters and Producers forecast that the country’s seafood exports can grow 10% year-on-year and reach US$9.4 billion in 2021 which is higher than the average rate of 6.8% in 2016-2019. Shrimp exports are expected to increase 15% compared to 2020, with a revenue of US$4.4 billion in 2021.
Chart: Shrimp and panagsius value, by year (US$ billion). Sources: Bloomberg & SSI Research
Consumption of seafood in the US and EU could increase when the vaccination against Covid-19 becomes widespread in these two markets in the second half of this year, then encouraging more consumers go out for eating at restaurants instead of staying home.
Vietnam managed to partly avoid impacts of the pandemic thanks to the effective pandemic control work, leading growth in shrimp export turnover in 2020 of up to 11% compared to 2019. For Vietnamese pangasius, it is estimated that a recovery in both output and average selling price will drive export growth for the whole year of 2021.
SSI Research has forecast that Aquaculture Stewardship Council (ASC) certified exporters may see more opportunities to expand in the EU market benefiting from the EU-Vietnam Free Trade Agreement which took effect last year. Average selling price can increase as demand surges, helping them improve gross margin.
However, it will be difficult for shrimp exporters to record the growth level of 2020, according to SSI Research.