Vietnamese seafood exporters now on the tenterhooks, because more and more European and American importers ask for lower prices or give up the contracts. Meanwhile, analysts have predicted worse situation towards the end of the year due to the public debt crisis in Europe and the US.
Demand down, inventory up
The tra fish export price to Europe fell by another 0.02-0.03 dollars per kilo in the first two weeks of August. The average export price to the market has dropped from 3.3-3.4 dollars per kilo in June and July to 2.8-2.9 dollars per kilo now. Meanwhile, the average export price to the US has dropped to 3 dollars per kilo.
In fact, the export price decreases have been anticipated, because importers have been well informed that the domestic material prices have decreased by 20 percent from the beginning of the year, and have tried to force the prices down.
However, the price decrease proves to be not the biggest headache for Vietnamese exporters now. What most worries them now is that a lot of importers have broken the contracts, while many others have asked for delivery delays.
“Some European importers informed the cancellation of tra fish import contracts in the first two weeks of August, reasoning that they do not have money to make payment,” Director of a tra fish export company in Dong Thap province said.
Tran Thien Linh, Director of the Thuan Phuoc Seafood and Trade Company in Da Nang City also said that the current situation is similar to that in the 2008’s crisis. The public debt crisis has forced commercial banks in Europe and the US to tighten credit. Therefore, the importers from the markets have to cut down the imports for storing.
Meanwhile, the sale has been going slowly in the consumption markets, since consumers now have to fasten their belt.
“We are facing double difficulties: the export markets have narrowed, while the domestic input costs have increased,” Linh said.
In the first seven months of the year, Thuan Phuoc exported more than 4300 tons of seafood which brought the revenue of 36 million dollars. However, as Linh said, the profit was not big because of the high production costs.
According to seafood companies, the seafood consumption season will resume in one month after a long summer holiday. At present, Vietnamese companies mainly make products to deliver for the contracts signed before, and prepare for the year-end season.
Enterprises complain that they have to pay high for storing, 1425 dong per kilo, which includes the bank loan interest rates, electricity…).
“I wonder if the export markets can get better by September, so that we can export more products,” a businessman said. If the situation cannot be improved, enterprises would be burdened with big inventory volume.
The Russian government is carrying out a solution package to stabilize the domestic seafood market, having setting up stricter conditions aiming to reduce the seafood imports. In the first quarter of 2011, the seafood imports to Russia dropped by 32 percent. Analysts have warned that the new policy would have big impacts on Vietnam’s tra exports.
To date, some ten Vietnamese enterprises have been licensed to export about 5000 tons of tra fish to Russia.
Foreign importers’ insolvency warned
According to Duong Ngoc Minh, General Director of the Hung Vuong Seafood Company, Vietnamese enterprises should keep cautious and not to try to export products at any costs. He said that a lot of importers have fallen into insolvency, and if Vietnamese enterprises venture to sell products to them, they may not fail to get payment.
Saigon Tiep Thi has quoted its sources as saying that some Vietnamese big shrimp and tra fish exporters are likely to lose hundreds of billions of dong worth of exports, because the importers still have not made payment.
“In the context of the input cost increases, businesses should be keep cautious and require the safe payment methods to avoid losses,” Linh said.
Source: Vietnambusiness News
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