New Delhi, February 16, 2020: As far as impact on India is concerned, ICRA notes that with China largely importing lower-value added and block frozen shrimp from India, the demand is serviced by several smaller exporters and few large players. Companies with high concentration on the Chinese markets would be impacted immediately, as demand falls. Smaller companies with limited financial flexibility will be impacted most.
The broader impact on India would stem from not only a reduction in Chinese demand but a correction in prices as the global supply-demand dynamics are disturbed. Ecuadorian shrimp prices have already started correcting, as demand from their biggest source market China contracted. The impact of fall in global shrimp prices on the Indian exporters would depend on their pricing contracts with their customers. Companies already locked into quarterly to annual price contracts would not feel the immediate impact. However, the margins of companies selling on spot prices would be impacted. Given the lead time of 3-4 months for cultivation, immediate term supply of shrimp is inelastic. However, stocking levels in Indian farms is showing signs of contraction, during the seasonally peak stock month of February. This could reduce supply over the next few months.
On a related note China is a key market for live seafood from India and this limited shelf-life market is already facing the brunt of the heightened Chinese regulations on live markets. Live and chilled seafood accounts for about Rs.1,000 crores of exports from India and this includes items like crabs, lobsters, whelks etc.
Corporate Comm India(CCI Newswire)
