Pangasius price increased 50% and will increase more soon

After almost two months, Vietnam is finally getting some good news for the seafood market. Some areas now are half lockdown which means people can go out, and factories can start to process after permission from the government. But on September 9th, an additional notice that only four districts in the green zone (no more cases) are active after September 15th. The remaining area must be lockdown for another 14 days to avoid the spread of Covid. Let take a review for the last month and check the current situation of the seafood market for panga.

After the long period of lockdown, the whole export volume decreased 36% compared to last year. The supply chain of raw materials that are difficult to transport, and some are broken. Delays in implementation time, lack of production materials, unable to guarantee delivery, delays in import and export procedures, increased costs, and transportation costs, a series of difficulties have become a burden on the Vietnamese seafood business.

After the first week of September, pangasius factories can start processing, and they call the workers back to the factory. But the situation is not very optimistic.

The ratio of vaccinated workers is still very low

The vaccine program in Vietnam is still slow, and the workers are waiting for the vaccine. Nearly two-thirds of the workers don’t get the vaccine. This could again affect the efficiency of the process and the production. This situation could be better at the end of September since the vaccine might be sufficient. Also, some workers are waiting for the second vaccine shot.

The raw material situation is terrible.

In the last article, we mentioned that the farmers could not cover the cost of feeding the panga, and they might feed the panga less frequently. In this month, the raw material situation is totally out of our expectations. Most of the panga are weak, and some are even dead since they did not receive any care. The big size and small size are all in a big shortage. For the HGT, usually, 1kg and 2kg are quite sufficient; at this time, we could only source some 800g+. We can tell how bad the situation of raw material is.

Freight cost is almost doubled, and pending orders prices are forced to change

Most of the factories could not offer the price in the whole last month because their production was severely affected. This week factories announced that there were some significant changes for the new orders and some pending orders. For the freight cost, in July, it was about USD 7,000-8,000, and now it’s around USD 12,000-13,000. We estimated in the last article that the cost of each container’s raw material would be USD 5000 more. However, the fact is that the container itself increased by USD 5,000.

Panga market – the final FOB price increased 50% compared to the price in July.

And for the raw material, the new offer price increased nearly 50%! That means for the pending orders in July, if the FOB price is $1.85/kg, now it should be almost $2.77/kg. So, for a 40 feet container, the raw material price increased by nearly $21,000. With the freight cost and raw material price increase, each container increased averagely by $26,000. Some factories already announced that their pending orders had to increase the final price. If not, they will cancel the orders because each pending order will cost them $26,000 more. They prefer to cancel the order to lose less money.

The new extension of the lockdown will destroy the panga industry, and this may cause more factories financial problems and even close

With the additional notice, only the four green areas can start production after September 15th. Many factories have had to cover many expenses to keep the factory going well during this difficult time. However, as we mentioned, they could not do that long. Many factories not in the green areas are applying to the government to see if they can return to produce. If they can’t return their production, they might increase the offer price more to reduce their loss. Some may just bankrupt.

Christmas purchase will accelerate the price increase

Vietnam covers 70% of the global panga market, so the panga demand can’t help increase for the last two months. Hundreds and thousands of order requests will rush to the factories. Compared to other tilapia and some white fish, panga is still “cheap.” The Christmas purchase for the USA and EU will accelerate the price increase because production capacity is limited. As we mentioned, with only 30% of the production volume compared to before, the panga fish will soon not be cheap anymore.

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