Tough times in tuna processing mean more plant closures likely
The wide discrepancy between canned tuna finished goods and skipjack raw material prices mean Tri Marine International’s American Samoa plant is unlikely to be the last to close, sources in the sector told Undercurrent News.
On Oct. 13, Tri Marine announced it will cease production at its Samoa Tuna Processors cannery on Dec. 11, but will seek a buyer for the plant. However, many in the industry hope that the closure will reduce overall sector-wide capacity, which is seen as a facotr depressing prices.
With finished goods prices as much as $350 per metric ton below the price of skipjack raw material, a change to this vicious cycle will only come when there is more reduction in overcapacity in production through exits of more packers, said a source with a big Asian canner, who did not wish to be quoted by name (source A).
“The packers taking the big gap orders just for cash flow to survive would be the first to go. It will come down to how long the banks will support, I guess,” he told Undercurrent. “We just have to wait and see.”
Prices for “sustainable” raw material, such as Marine Stewardship Council product or tuna caught without using fish aggregating devices, are more workable. “Sustainable fish has a workable spread, but the volume is not big enough,” he said.
According to one executive in the catching sector, who also did not wish to be quoted by name (source B), the consolidation of the number of plants is going to follow vessel capacity.
“Boats are rationalizing now, next is cannery capacity recalibration,” he said.
The number of vessels registered by the Western and Central Pacific Fisheries Commission (WCPFC) has dived, he said, with the number of plants to follow.
“Vessels registered in the WCPFC dropped to 250 last month, down from a high of 318,” said source B.
This has partly been driven by the rock bottom prices seen for skipjack, which have gone as low as $1,000/t at the end of last year. They have since somewhat recovered, but the outlook is uncertain.