BERGEN, Norway — Nigeria, the world’s largest market for pelagics (in theory), should be more promising as an importer in 2018, according to the Norwegian Seafood Council (NSC).
In a presentation by Trond Kostveit, project manager for west and central Africa – delivered, though, by Pelagic Fish Forum’s Jan Trollvik – the NSC noted that Nigeria has an estimated pelagics import demand of 1.8 million metric tons per year.
How much actually goes there though tends to depend on its ability to import, and world pelagic quotas – when quotas are high and supply outweighs demand elsewhere, more tends to go to Nigeria, noted Trollvik.
2018 looks more promising than last year, mainly thanks to higher oil prices and a stabilized naira-to-dollar exchange rate, the presentation claimed.
In recent years, Nigeria has used import restrictions to try and balance trade deficits caused by a dive in the value of OPEC crude oil — a major export for the African nation. Hence, as oil prices recover somewhat, the country becomes theoretically more amenable to imports.
However, import licenses given out by the government this year are down year-on-year; 600,000t, from 700,000t in 2017. “This is not a huge deal this year, but it would be worrying if it was to become a pattern,” said Trollvik.
Licenses for 400,000t had been issued as of the end of February.
In mid-March economic news outlets have noted the naira strengthening against the dollar, and inflation slowed for the thirteenth consecutive month in February.
On the other hand, said Trollvik, Norway and EU exporters are likely to face tough competition selling to Africa, from Russia and China among others.
In 2017 Europe’s pelagic quotas were down, and the EU; Norway; Iceland; and the Faroe Islands sold less to the African market. Sales totaled around 120,000t, compared to almost 250,000t in 2015.
That market gap was filled by Asia, NSC noted. Japan’s Pacific mackerel quota rose from 10,000t to 55,500t in 2017, while China’s herring quota was 49,000t, up from 15,000t. These increased catches pushed prices down, allowing Nigeria to turn here for supply.
“This trade route had gone from being nothing in 2016 to a few thousand tons in 2017,” noted Trollvik. He also mentioned rumors of “an NSC-style” marketing and promotion board being discussed in Japan, to target sales in both Asia and Africa.
As of March 12, mackerel prices were at NOK 10.12 per kilogram on average, with landings roughly 20,000 metric tons down y-o-y, according to Norway’s pelagic sales body, Sildelaget. This is up from NOK 9.31/kg.
Spring-spawning herring prices are NOK 4.62/kg, compared with NOK 5.80/kg in the first few months of 2017. So, some small herring may find its way to Africa, but mackerel sales seem likely to be down y-o-y.
“There were some exports of herring to Egypt and Nigeria for the smallest and lowest priced herring, yet of limited importance,” Nordea analyst Finn-Arne Egeness told Undercurrent earlier in 2018, of the prior year. “There is export of mackerel to Egypt, Nigeria and Ghana. Yet, oil prices need to increase to make Africa more interesting for Norwegian exporters,” he said of the 2018 outlook.
Sources have, in the past, told Undercurrent that sometimes pelagic sales to Africa may make a loss, but that a trading company balances this with profitable sales elsewhere; it’s just a part of the operations.
When it comes to how best to make a profit on sales to Africa, Trollvik noted the main hindrance for importers is coldstorage across Nigeria. “Stability of supply is vital, as is predictability in sales,” he said.
NSC advised exporters to look at establishing sales channels for periods of high quotas, and to set up agreements with importers in market segments which were willing to pay for high fat content, high omega-3 content, and traceability of origin.