Chinese demand pulling lobster prices up, stretching supply

March 28, 2014

Neil Ramsden

Chinese and Asian demand for lobster has rescued North America from a glut of supply, but has not been positive across the board in Maine and Canada.

While the emerging Asian markets have been valuable for balancing supply and demand, the sheer strength of demand has seen some traditional markets struggle for product.

Mark Murrell, owner of online lobster sales and distribution network Get Maine Lobster, was preparing as best he could for the demand boost of Chinese New Year at the end of January, which he was concerned would require more lobster than was even in the water – a million pounds.

Recently he confirmed to Undercurrent prices went up and supply was limited because of the Asian celebrations – he had to alter what he could sell, and expected to run out of 5-6 ounce lobster tails in March.

“I am paying twice as much per pound than I was this summer,” he said. “China has a little to do with that, but also, less fishermen are going out. China can likely come in and pay a fraction per pound that I pay, though that is because they are buying huge volumes.”

“If they [Chinese buyers] are like me, I want best value and best price. All I know is, this time of year, everything is tough, supply is low and cost is up.”

Geoff Irvine, executive director of the lobster council of Canada, agreed that the significant increase in sales to China has affected traditional markets.

“Due to higher landings the overall lobster market has expanded in the last few years, so it is very hard to tell, but in general the more that we sell into those types of high-value markets, the less there is available for the lower value markets, so prices will rise for everyone in the value chain,” he said.

“There is recognition that sales channels will ebb and flow with landings volumes and emerging markets, which is normal in an international market for premium protein like lobster,” he added.

Changing markets

Atlantic lobster landings have been on the up across the continent over the past two or three years, to the extent that supply was overwhelming demand, Patrick McGuiness, president of the fisheries council of Canada, told Undercurrent News.

Sales of Atlantic lobster from Canada to China were up 16% in volume in 2013 over 2012, and to Hong Kong up 48% in that same period. In value, they totaled CAD 47m and 33m respectively, according to lobster council statistics; the price increase was small, as demand from European markets subsided under economic pressures.

An update by lobster industry analyst Michael Gardner using cumulative US and Canada data showed the two countries’ lobster landings have increased by 70% in the last 10 years, with the US recording a 100% increase in lobster landings, from 32,000 metric tons in 2003 to 65,000t in 2012. Canada’s landings have increased from 48,000t in 2003 to 72,000t in 2012.

“China is buying more Canadian lobster because it is a premium, high quality product and our exporters, trade associations (like the lobster council of Canada) and governments are investing more in marketing that is paying dividends,” said Irvine.

McGuiness remains positive with regards to the heightened Asian demand, describing the emergence of the markets as “a lifesaver”.

Even the low prices resulting from the glut had some beneficial repercussions. The lower prices gave retailers confidence in buying lobster, he said, and at a time when the industry is trying to structure itself to capture new markets, this has provided a valuable opportunity.

An important move for the Canadian lobster industry is the move in 2014 to gain MSC certification for almost 90% of its fisheries. This too should strengthen appeal for retailers who align themselves with sustainably-caught seafood in the US, Canada, and the EU – Germany in particular, he suggested.

Indeed, McGuiness felt like around sustainability at the recent Seafood Expo North America in Boston was more calm than in previous years, with an air of acceptance and ‘getting down to it’ coming from most.