Oversupply to push salmon prices down
Several Chilean salmon industry analysts believe that the European demand for salmon has not decrease yet, but they are concerned because of the EU economy contraction and its influence over France, which is the main destination for Norwegian salmon. As a consequences, this may increase competition for other traditional Chilean markets, such as the US.
Another key factor in this analysis is the current oversupply of salmon. "The local industry players wanted to exploit the price boom in 2011 but they expected higher mortality rates than the real ones, which has generated a production larger than demand in both, Norway and Chile," explains the analyst of financial consulting company and security broker dealers EuroAmerica, Andrés Galarce.
According to the Chilean newspaper El Mercurio, although prices are expected to rebound not before 2013, the current situation is not that adverse for the industry.
EuroAmerica considers that the industry's performance will remain positive this year fostered by capital increases (around US$ 711 million) made in 2010 and 2011, which have increased the liquidity in the companies. Besides, EuroAmerica believes that the seafood consumption has increased at the expense of red meat, due to the higher prices of red meat in the past decade.
Finally, analysts estimate that those salmon producing companies listed in the Santiago Stock Exchange will navigate in still waters while those not listed may experience some difficulties this year.
