for high and low prices in 2019/2020 Hotel Bloom Brussels, SEG May - - PowerPoint PPT Presentation

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for high and low prices in 2019/2020 Hotel Bloom Brussels, SEG May - - PowerPoint PPT Presentation

Dec 12, 2023 439 likes •801 views

Scenarios & Drivers for high and low prices in 2019/2020 Hotel Bloom Brussels, SEG May 6 th 2019 by / Ragnar Nystyl Kontali Analyse Q1 2019 vs. Q1 2018 What has been different ? Market Supply Apparent Consumption -

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Scenarios & Drivers for high and low prices in 2019/2020

Hotel Bloom Brussels, SEG – May 6th 2019

by / Ragnar Nystøyl – Kontali Analyse

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Q1 – 2019 vs. Q1 – 2018 What has been different ?

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Market Supply – Apparent Consumption - Atlantic Salmon

Systemizing the world of aquaculture and fisheries

Q1-2018: + 10 %

EU: + 5 % USA: + 7 % RUSSIA: + 42 % JAPAN:

  • 8 %

CHINA/HK: + 34 % BRASIL: + 22 % OTHERS: + 14 %

Q1-2019: + 4 %

EU: + 5 % USA: + 5 % RUSSIA:

  • 15 %

JAPAN: + 6 % CHINA/HK: + 18 % BRASIL: + 2 % OTHERS: + 4 %

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Harvest Volumes – By region Atlantic Salmon

Systemizing the world of aquaculture and fisheries

Q1-2018: + 10 % EUROPE: + 3 % AMERICAS: + 23 % Q1-2019: + 5 % EUROPE: + 6 % AMERICAS: + 3 %

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Salmon Growth – (Feed sales development…) Atlantic Salmon

Systemizing the world of aquaculture and fisheries

Q1-2018:

  • 1 %

EUROPE:

  • 7 %

AMERICAS: + 5 % Q1-2019: + 12 % EUROPE: + 11 % AMERICAS: + 12 %

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Q1 2019 – Salmonid feed sales growth – By region Relative & Absolute change

Systemizing the world of aquaculture and fisheries

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RESULTS: Global Biomass Status + 8 % Y-o-Y + Availability of harvest-ready biomass sees even greater increase + Approx. 15 % Y-o-Y

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  • Est. Development in Harvest-ready* biomass – Globally**

Atlantic Salmon

Systemizing the world of aquaculture and fisheries

*Harvest Ready; Calculated share above 4 kilo WFE **Global; NO, CL, UK, Nam, FO, IE/IC

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Change Year-over-Year; Harvest Ready Biomass Currently – Both a European & American phenomena

Systemizing the world of aquaculture and fisheries

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Q1 – 2019; Shift in market position continues Estimated global share of large sized salmon harvested

Systemizing the world of aquaculture and fisheries

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How does this status convert into; Harvest Estimates & Harvest Profile

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Outlook 2019 – Atlantic Salmon Estimated Harvest Need & Market Split ( In tonnes WFE)

Systemizing the world of aquaculture and fisheries

Harvest Volume 2017 2018 Chg.

  • Std. Scen

Chg.

Norway 1208 1253 4 % 1321 5 % 1300 - 1340 Chile 564 677 20 % 711 5 % 700 - 750 Scotland 177 154

  • 13 %

179 17 % 170 - 185 North America 161 165 3 % 164

  • 1 %

160 - 170 Faroe Islands 80 72

  • 11 %

80 12 % 75 - 85 Others 104 98

  • 5 %

124 26 % 115 - 130 Totalt 2294 2420 5 % 2579 7 % 2500 - 2650

Market Supply 2017 2018 Chg.

  • Std. Scen

Chg.

EU 1023 1063 4 % 1125 6 % 1100 - 1170 USA 442 475 8 % 514 8 % 510 - 550 Russland 78 97 24 % 105 9 % 100 - 110 Japan 64 60

  • 6 %

64 6 % 60 - 70 Brasil 89 100 12 % 105 5 % 100 - 110 Kina/HK 100 113 14 % 125 10 % 120 - 135 Andre 471 503 7 % 551 10 % 540 - 570 Totalt 2266 2410 6 % 2589 7 % 2500 - 2670

2019E Range 2019E Range

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Harvest Estimates – EUROPE; Atlantic Salmon

Systemizing the world of aquaculture and fisheries

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Harvest Estimates – AMERICAS; Atlantic Salmon

Systemizing the world of aquaculture and fisheries

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Price development - YTD

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Increasing price trend during Q1 – Both EU and US But not into the same degree as last year……

Systemizing the world of aquaculture and fisheries

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Fresh Atlantic Salmon Export price development -> Q1-19 For Q1-19; Increase – All regions except Faroe Islands

Systemizing the world of aquaculture and fisheries

*Jan-Feb19 for: Faroe Islands, Scotland

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Scenarios for High or Low Spot prices – EUROPE, Atlantic Salmon Q2-2019

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Systemizing the world of aquaculture and fisheries

Average Spot-price Q2-2019 Scenario A: HIGH PRICE «As Q2-2018» (NOK 66 – 70 / kilo) Scenario B: LOW PRICE «Back to pre-2016 level» (NOK 56 – 60 / kilo) Scenario C: MID LEVEL

«Below 16/17 –but close» (NOK 61 – 65 /

kilo)

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Systemizing the world of aquaculture and fisheries

Drivers for price-scenarios in Q-2

Scenario A - HIGH PRICE:

  • Strong and Quick increase in Asian demand for European Large

Salmon

  • NOK/EUR rate at 9,80
  • Following strong April-harvest, farmers hold back harvests in

May/June

Scenario B - LOW PRICE

  • Sea-lice levels Norway –> Strong anticipation of harvest of 18G

May/June

  • Lots of harvest of small fish in Europe – with only EU as off-take

market….

  • Trade conflict level US / China – Affecting Asian demand rapidly

Scenario C - MID LEVEL

  • Surplus - Harvest-ready biomass being «portioned out between

Q2/Q3»

  • Better availability of larger salmon – reduced price premium ->

spurring demand in overseas/Asian markets

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Scenarios for High or Low Spot prices* – EUROPE, Atlantic Salmon Second Half 2019

*Nasdaq Exporters Sales Price FCA Oslo – Weighted avg.

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Systemizing the world of aquaculture and fisheries

Average Spot-price – Second Half 2019 Scenario A: HIGH PRICE «Back to 2016» (NOK 59 / kilo or higher) Scenario B: LOW PRICE

«Not seen since 2015»

(NOK 52 / kilo or lower) Scenario C: MID LEVEL «Like last year?» (NOK 53 - 59 / kilo)

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Systemizing the world of aquaculture and fisheries

Drivers for price-scenarios in Second Half 2019

Scenario A - HIGH PRICE:

  • «Lousy Lice-Scenario» in Norway. Sealice just as problematic as last

year, lost feeding days, poor growth on S0 18; No improvement in harvest weights

  • Algae in Scotland and Faroe -> Mortalities and poor growth over summer
  • Lots of harvesting of smaller sized fish early summer - (Q2-B Scenario),

entering September with European biomass surpluss of less than 4-5 %

Scenario B - LOW PRICE

  • Norway finally achieving regular, good feeding, and increased harvest-

weights

  • Chilean caligus «crisis» - Need to place forced harvest/surplus to

US/Asia at «bargain prices»

  • Brexit – Hard and Complex – A total mess………

Scenario C - MID LEVEL

  • Harvest profile as in standard scenario.
  • Despite stronger supply increase than since long, demand keeps strong

–

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Scenarios 2020 Case Chile vs. Case Norway What If….

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Systemizing the world of aquaculture and fisheries

Chile; 2015 -> today

  • Following a change in the regulatory regime, which had – among others, the

following effects: Limit the possibility of unsustainably, strong growth

  • Volume growth has been stronger than «most» anticipated;

Drivers;

  • Dramatically improved productivity

(Losses down, harvest weight up, growth time up, FCR down)

  • Rapid shift over to High-Energy feeds diets
  • In forefront with respect to implementing new vaccines / new treatments against

the industry’s two major fish-health challenges: SRS & Caligus STILL, Majority’s perception going forward (including ours); HOW LONG WILL IT BE BEFORE THE POSITIVE PRODUCTIVITY TREND SHIFTS, INTO A «NEGATIVE DIRECTION», NOT TO BUT TOWARDS «OLD NORMAL»

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Systemizing the world of aquaculture and fisheries

Norway; 2012 - today

  • Following increasing sea-lice challenges, including also need to comply with

stricter and stricter regulatory regime on sea-lice, despite initiatives to increase capacity.

  • Volume growth has been only marginal – Capacity utilization down

Drivers;

  • Notably declining productivity

(Avg. loss-weight up, harvest weight down, FCR up, growth time down)

  • Sea-lice treatments, with notable side-effects (Mortalities – Loss of feeding days..)
  • Lack of alternative tools in sealice mitigation, some current methods under

pressure

  • Pancreas Disease – Following years of causing high costs & low productivity –

Not solved STILL, Majority’s perception going forward (including ours); WITH SUCH FOCUS & SPENDING ON SEA-LICE COMBATTING, HOW SOON WILL NORWAY BE «BACK TO NORMAL» ON HARVEST WEIGHTS &

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ILLUSTRATION HARVEST WEIGHTS – NORWAY VS. CHILE

Systemizing the world of aquaculture and fisheries

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ILLUSTRATION LOSS-RATE – NORWAY VS. CHILE

Systemizing the world of aquaculture and fisheries

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WHAT IF ???

PERCEPTIONS SHOULD BE FULLY THE OPPOSITE, AND THE REALITY IS: «CHILE HAS REALLY CRACKED THE CODE» «NORWEGIAN PRODUCTIVITY;

  • STUCK IN THE MUD»
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Systemizing the world of aquaculture and fisheries

New assumptions – Loss Rate

Kontali Standard Scenario WHAT IF ? - Assumptions

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New assumptions – Harvest Weights

Systemizing the world of aquaculture and fisheries

Kontali Standard Scenario WHAT IF ? - Assumptions

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OUTPUTS 2020/2021 - FROM A SCENARIO; ……. A SCENARIO THAT IS STILL A BIT HARD TO IMAGINE

Systemizing the world of aquaculture and fisheries

  • On continued productivity improvement, the Chilean industry still finds ways to

increase Atlantic smolt release by + 5 % a year

  • The Norwegian «Traffic light based» capacity increase; due to many red zones, is
  • n average reduced by 1 % per year
  • Chile has by 2021, not fully caught up with Norwegian harvest volumes – but is

nearly

  • there. Other European producing regions are suffering a similar situation as

Norway.

  • Price level in Europe continues to be high, but producers margins are declining…
  • Asian salmon markets are increasingly more dominated by Chilean exports, while

European market players have started importing frozen whole Chilean salmon, to secure raw material base and desired-size bands.

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CONCLUSION…… Immediate - Short – Medium Term WHAT ARE THE MOST LIKELY SCENARIOS? A-B-C B-B-C C-B-A B-C-B C-C-C ????

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Agenda