Coronavirus causing trade disruptions between Russia and major trading partners

Russia’s seafood industry is facing a serious threat from the COVID-19 pandemic, with two of its biggest export markets, China and South Korea, essentially shut down.

China and South Korea are crucial to Russia, accounting for a vast majority of the country’s seafood exports. In 2019, Russia exported 1.7 million metric tons (MT) of seafood, with 1.2 million MT, or 70.5 percent, going to China. Half of this volume was pollock, according to the Russian Customs Service.

Nearly all the veterinary certificates issued for fishery export in the Primorskiy krai and Sakhalinskaya oblast, two regions in the Russian Far East, in February 2020 were for deliveries to China and South Korea, with just four percent for exports elsewhere (all to the European Union), according to Federal Service on Surveillance for Consumer Rights Protection And Human Wellbeing (Rospotrebnadzor).

China and South Korea are also among major buyers of Russian crab. In 2018, 76,700 MT of crab was caught in the Russian Far East. Of that total, 58,300 MT was exported to China, South Korea, and Japan. In the first three months of 2019, Russian fisheries exported 10,500 MT of crab, and China’s share of that take was 2,500 MT, with South Korea and Japan receiving similar volumes. The current total allowable catch (TAC) for crab in Russia, including the Far Eastern and the Northern fishery basin, is 100,000 MT.

Alexander Efremov, the CEO of Dobroflot, a Russian fishing company, told Kommersant that Chinese partners have paused negotiations on all deliveries of fish from Russia. The overall situation is “rather alarming,” Efremov told.

Alexander Savelyev, head of the Fishery Information Agency, said Russian vessels delivering pollock and herring face delays in Chinese ports due to shutdowns of Chinese processing facilities, according to Interfax. Russia’s own cold-storage capacity is maxing out, and the domestic market isn’t large enough to digest all of the seafood coming out of the Russian Far East, Savelyev said.

Savelyev said the price for pollock has fallen to USD 1,400 (EUR 1,252) per MT, down from an average of USD 1,500 (EUR 1,341) per ton last year. Besides the processing slowdown in China, lower prices are also partially a result of a banner pollock season thus far in 2020. As of 3 March, 555,000 MT of pollock had been caught, up 14.8 percent to the same period last year. Herring catches were also up, reaching 56,160 MT, a boost of 4.3 percent year-on-year.

Georgy Martynov, president of the Primorye Fisheries Association, told Konkurent most of the companies in his association continue to operate normally despite the coronavirus.

“We have not seen significant consequences for the fishery industry at the moment,” he said. “Prices have not also been affected much.”

However, Martynov admitted that delays for Russian goods arriving in Chinese ports are a cause for concern. He said the association has recommended crews on its members’ ships not disembark in China in order to avoid infection.

While the impact of the coronavirus on Russia’s fish exports appears to thus far be minimal, the country’s crab segment is operating with more anxiety, according to Alexander Duplyakov, the president of the Crab Catchers Association of the Far East. In an interview with Konkurent, Duplyakov said

“The Chinese market, representing 17 to 20 percent of TAC, [has been] squeezed to nearly zero,” he said. “It’s OK with South Korea, nearly the same volume, but we don’t know what will happen next.”

The main crabbing season starts after 10 April, and with the speed of international developments related to the coronavirus, much can happen between now and then, he said.

In 2019, he said, some Russian crab was delivered to U. S., but the potential to redirect more of Russia’s catch to the U. S. is limited, Duplyakov said.

German Zverev, president of the All-Russian Association of Fishing Industry (VARPE), calculated that Russian crab catchers may face coronavirus-related losses of up to USD 80 million (EUR 71.56 million) in the first quarter of 2020. The sector began feeling pain during the Chinese New Year, when the coronavirus first started spreading in China, depressing celebratory feasts and restaurant-visits there, he said. As of early March, the export price for one kilogram of Russian crab has fallen to USD 7.00 (EUR 6.26) against USD 15.00 to USD 18.00 (EUR 13.41 to EUR 16.10) at the same time last year, Zverev told RBC, basing his calculations on data from the Russian Customs Service.

In regard to imports, in February, Russia’s Federal Service for Veterinary and Phytosanitary Surveillance temporarily banned import of fish from China. On 3 March, the ban was extended for an unlimited period of time.

Polina Kyrova, the business development director at retail chain Rybset, told Rossiyskaya Gazeta that price for some seafood products, including caviar, has fallen slightly due to the additional volumes now available in the market. Pressure from Chinese caviar imports has pushed the cost of one kilogram of black caviar down to RUB 40,000 (USD 605.60, EUR 541.73). But if Russia decides to implement a ban on Chinese caviar – still currently being permitted into the country – prices may return to the levels they were at in 2010, prior to the arrival of Chinese imports. A decade ago, prices hit RUB 110,000 (USD 1,665, EUR 1,490), and a return to those levels will occur within two to three months of a ban on Chinese imports.

However, Russia’s ban on most other seafood imports from China will have a minimal effect Kyrova said. The imported volume of 100,000 MT of tilapia, char, shrimp, and eel that Russia receives from China can be replaced by Russian production, she said.

Photo courtesy of Vvicca1/Shutterstock