10% drop in margin for seafood shippers this year on lower American demand

Impact of declining demand is visible already, with international shrimp prices shedding 7% y-o-y between December 2017 and February 2018

Realisations in dollars from seafood export are expected to drop by a tenth in 2018-19, with a surge in production of Vannamei shrimp from key producing nations and lower American demand.

According to a report by Crisil Research, seafood export will grow 17-18 per cent this financial year, 500-700 basis points (bps) slower than the 23 per cent and 25 per cent rates in FY17 and FY18, respectively. The report say that's still robust, as that growth will come over a high base.

In value terms, exports are expected to cross $8 billion (Rs 539 billion), while volumes are seen growing 20-21 per cent, apace with the past two years, the report added.

Realisations from the US, the largest importer of Indian shrimp, rose sharply during FY14 and FY15 but softened in FY16 as supply improved.

The impact of declining demand is visible already, as international shrimp prices were down seven per cent year-on-year on average between December 2017 and February 2018. In fact, prices were down 11 per cent in March and are expected to fall further.

The US has preliminarily tripled the anti-dumping duty on seafood exports from India, to 2.34 per cent from the earlier 0.84 per cent. The hike will impact exporters' margins, while not directly impacting volumes. The final rates will be announced in July.

In FY18, average realisation for shrimp rose one per cent in dollar terms but fell three per cent in rupee terms. In FY19, a one per cent depreciation in the rupee and reduction in hatchery seed prices will partially offset a fall in dollar realisation, the report added.