The answers to your questions. By / Ragnar Nystøyl CHRISTMAS SEMINAR Bergen, 19. November 2014
Agenda - Norwegian Production & Supply issues - Global Production & Supply issues - Market- & Price-related issues
Answering Your Questions Norwegian Production Issues
Feed sales down on higher biomass? SALE OF DRY FEED IN TONNES Change % 2008 2009 2010 2011 2012 2013 2014 13/14 January 63 800 71 200 69 200 71 000 101 600 93 000 109 900 18 % February 54 600 58 000 56 400 55 800 86 100 60 200 90 500 50 % March 57 100 54 100 61 900 61 000 88 000 59 700 85 100 43 % April 59 300 65 700 62 700 62 300 87 400 67 400 89 800 33 % May 76 200 87 100 89 300 101 700 102 600 95 300 110 200 16 % June 97 500 120 300 117 800 122 100 130 200 130 300 146 900 13 % July 130 000 159 200 153 800 167 300 181 900 196 500 193 400-2 % August 147 800 175 400 184 400 205 400 218 400 218 200 204 500-6 % September 157 000 172 500 178 500 212 600 203 000 218 100 208 700-4 % October 147 900 159 100 161 400 178 600 194 300 198 500 195 400-2 % Total 991 200 1 122 600 1 135 400 1 237 800 1 393 500 1 337 200 1 434 400 7 % November 113 100 135 800 132 400 150 900 151 300 155 400 December 96 300 111 200 97 500 120 300 118 900 131 800 Year total 1 200 600 1 369 600 1 365 300 1 509 000 1 663 700 1 624 400 Source: Fishfeed Producers Organisation (FPF/FHL). 18.11.2014 The statistics include sale of dry feed to farms and smolt plants in Norway for all species of fish. Kontali Analyse AS has estimated the share that is used for salmon production in fish farms.
Norway; Relative Feeding Atlantic Salmon
Seawater Temperatures
Seawater Temperatures
The Sealice Combat. Number of feeding days per month - 30 Number of feeding days lost per «treatment» - 4-5 Percentage of sites treated / month - 7-8 % Do the Math!!
MAB Capacity vs. Biomass
MAB Capacity vs. Biomass Green Licenses Cat. B 6 % Temporary Increase MAB Green Licenses Cat. A + C Removal Temporary Increase Est. 20 % of industry buy & report implementation of 5 % Green Increase
Biomass Status per end October Atlantic Salmon - Norway Biomass - Atlantic Salmon - Norway Change in % Estim ated stock per 31.10.2014 Estim ated stock per 31.10.2013 Num ber Avg. W Biom ass 12 G S0 50 a 6,0 300 11 G S0 80 a 5,0 400 13 G S1 43 700 a 4,6 202 500 12 G S1 52 000 a 4,6 239 300-16 % 1 % -15 % S0 110 200 a 3,1 337 800 S0 102 200 a 2,9 296 700 8 % 6 % 14 % 14 G S1 148 100 a 1,1 167 000 13 G S1 143 600 a 1,1 158 400 3 % 2 % 5 % S0 119 700 a 0,2 25 800 S0 113 600 a 0,2 23 100 5 % 6 % 12 % Total stock (r.w.) 733 400 Total stock (r.w.) 717 900 2 %
Seawater Temperatures Bathing conditions Outer Bergen harbour area Week 46 2013: 10,4 C Bathing conditions Outer Bergen harbour area Week 46 2014: 11,2 C Can this indicate that were heading for a new warm winter?
Answering Your Questions Global Production Issues
Chile 2012 2014E + 210-215 000 tonn (+ 10 %) Which regions are behind this growth? Chile: + 200 000 tonn Norway: + 15 000 «Faroe Islands: + 11 000 «Scotland: + 5 000 «North-America: - 25 000 «Others: + 6 000 «
«Turnover on Biomass» - Chile For generations second year in sea Harvest of 13G in 2014/ Biomass 13G primo 2014
Development - Loss per Generation Atlantic Salmon - Chile
Answering Your Questions Market & Price Issues
Market growth during 2014 Considerable GLOBAL MARKET GROWTH EU USA RUSSIA JAPAN Chg. Volume(wfe) Chg in % OTHERS Q1-14 18 500 + 4 % 3 % 4 % -14 % 16 % 10 % Q2-14 71 000 + 15 % 14 % 6 % -2 % 32 % 27 % Q3-14 56 500 + 11 % 12 % 10 % 5 % 3 % 14 % Q4-14 32 500 + 5 % 5 % 12 % -22 % -9 % 13 % Q1-15 16 500 + 3,5 % Q2-15 -8 000-1,5 %
A man that goes by a new name in Chile.. Saint Putin
Chilean Exports to Russia Frozen whole Atlantic salmon
Increasing amounts of money involved (Export revenues All salmonids - Chile -> Russia)
Weak RUBLE Purchasing Power? - Solvency? June: 1600 tonnes exported USD 5,99 / kilo fx. July ~ 35 RUB 210 / kilo September: 10 900 tonnes exported USD 5,92 / kilo (- 1 %) fx. October ~ 40 RUB 240 (+ 14 %)
Norwegian Export Distribution - Salmon Effect from Russian Import Ban
Russia Market Shares Atlantic Salmon Development through Q2- Q4 * Domestic supply + Est. re-export from 3rd countries
Norwegian Export Distribution - Trout Effect from Russian Import Ban
Norwegian EU-exports: + 11 %.to France: - 9 % Is the French Market really that weak? -9 % -5 %
Price development - 2014 Nasdaq Salmon Index (3-6) (weighted by real size split & weekly harvest)
Currency Development A strong driver behind increased prices.. EUR / NOK USD / NOK
Scenario 50+ in 2015 What happens with Supply and Market, in order to see 50+ in a quarter Is this a possible scenario? Yes.
Scenario 50+ in 2015 Supply - No warm winter in Norway - Sealice resistance (Salmosan) - Chile Yield down, feeding down and loss-rate up - Production issues with sealice, PD and AGD persists. Market / Demand - Oil price increase, and RUB / USD to 40 or lower - World relation to Russia stabilizes - 3rd country «trade-flow valves» - still open. - No «3rd» EU-ressecion - European Bird Flu situation escalates
Scenario 30- in 2015 What happens with Supply and Market, in order to see 30+ in a quarter Is this a possible scenario? Perhaps..?
Supply - Warm winter in Norway Scenario 30- in 2015 - Biomass being held back (till end March in Norway) -> High sealice levels + early occurance ofagd from Agder to Trøndelag leads to excess harvesting Aug Oct - Turnover on biomass 14G - Chile -> «3x» or higher Chile supply 15 ends at 580 Market / Demand - RUB / USD at 45 or higher Demand for salmon is notably affected by high - NOK / EUR back to 8,00 or lower, and NOK / USD at 6,10 or lower - Payment issues Russia Shipments from Chile and Fare Islands to Russia stop - Resssecion-like development in the EU market Slows down demand
Cost development Increased price may be needed. (to keep margins unchanged ) Major drivers: - Currency for imported goods/services - Cost of feed ingredients - Cost of A) Combating fish health issues B) Fulfilling to ever-stricter regulations
Fishmeal Peru - Anchoveta El Niño
Peru - Anchoveta El Niño Qouta not fully fished 2015E El Niño effect also into 2015.. Spring-quota may also be notably reduced. Per date: Imarpe recommends 0-catch High juvenile share in trial-fisheries
USD/Tonn USD/Tonn Double effect on Feed price in Norway 2400 2200 2000 1800 1600 1400 1200 1000 800 600 Fishmeal-price Peru, FAQ, fob Week 45: 2 200 USD/Tonne Week 45: 1 300 USD/Tonne 2014 2013 2800 2600 2400 2200 2000 1800 1600 1400 1200 1000 Fishoil-price Peru, fob Week 45: 2 300 USD/Tonne Week 45: 1 850 USD/Tonne 2014 2013 Source: Weekly Newsletter OIL WORLD, ISTA, Hamburg, Germany Source: Weekly Newsletter OIL WORLD, ISTA, Hamburg, Germany combined with. Feed price 2015..up by NOK 1,50 / kilo??
Final Comments. Short - Medium Long term outlook Production constraints -> Into a larger degree lead to: Supply growth not being able to keep pace with demand growth Implications: For the producer: - Far less downside risk Market wise - Increased revenue potential Finding & Adressing -best-paying markets For the processor/distributor: - Fiercer competition for raw material - Between - and from new geographical markets - From more and new Product segments / Utilizations
Thank you & Merry Christmas!!! www.kontali.com