During the Barcelona exhibition, Norwegian Bank (DNB) analyst Alexander Aukner said at the Salmon Market Symposium that there will be unusual situations in the global supply of farmed salmon in 2023-2025, the growth of production will be very slow, and the possibility of market rebound is also very small.

"Historically, the soaring spot price of salmon is mainly due to the short-term growth rate of supply lagging behind demand. However, the situation from 2023 to 2025 is quite special. In the past few months, the industry has paid too much attention to the issue of 'resource tax', while ignoring the nature of supply and demand balance. This year, there has been a reset in both supply and prices, proving once again that the market response has been much stronger than we thought," Aukner said.

"It's hard for us to see a rebound in those markets, and those supply countries can see a significant increase in the supply of raw materials. If the industry does not grow, there may be a lot of problems, but it also means that we have a very low spot price in the next three years. Probably will remain high. Salmon prices will not be as high as they are now, and will fall in the second half of this year, but still at a high level, at least higher than our forecast 12 months ago."

In the past, salmon supply problems were usually caused by special events, such as red tides; the problem this year is that the market does not seem to be driven by one or two events, but by the deterministic growth rate (slowdown) of multiple traditional farming origins.

"We call it regulatory issues, biological issues, and industry threshold issues. These issues occur simultaneously in multiple origins, which means that we will see more aggressive price expectations and consumer market estimates."

The Bank of Norway predicts that in the first and second quarters of 2023, the spot price of Norwegian salmon will be around NOK 105/kg, and the average price will fall back to NOK 80/kg in the second half of the year. In the first quarter, the Norwegian salmon harvest decreased year-on-year, the proportion of low-grade salmon increased, the spot trade volume increased, and the contract market share decreased. This trend will also enter the second quarter.

"Contract volumes have fallen significantly year-on-year, and we will continue to see this trend in the second quarter. In the first quarter, Norwegian salmon production fell by 12,000 tons, and another 5,000 tons of low-quality products, so exports fell by almost 17,000 year-on-year In addition, the contract market has reduced the trade volume by about 30,000 tons, while the actual supply in the spot market has increased.”

"The growth rate of salmon supply is slowing down, there will be a rebound in some years, and the performance in some years will be particularly bad. We expect Norway's growth rate to be in the range of 2% to 3% in the next few years, and a conservative estimate is 2%. The Norwegian government believes that Supply growth will not be affected by the resource tax, but our view is different and growth in Norway will be more challenging."

"We also think that the Norwegian 'traffic light' system that appears to be marking more and more origins yellow (restricting growth) rather than green will also affect the auction of salmon licences. We note that because of the resource tax bill, the Norwegian industry about NOK 40 billion in investments are frozen."

"The growth of British salmon is also very difficult. Some areas have been advised to ban salmon farming, and some waters in Scotland have to develop marine protected areas. On the west coast of Canada, the salmon farming industry is also facing difficulties. Some areas are not allowed to engage in farming. On the east coast, growth It is allowed, but under more difficult conditions. Growth in the Faroe Islands and Ireland will not have an impact on the market.”

"In the past two years, the Chilean salmon industry has developed very well, which is reflected in indicators such as mortality rate and harvest weight. In recent years, there have been no volcanic eruptions or red tide disasters in Chile, but some enterprises have serious overproduction problems, which may lead to production in the region. Slow down."

“Land-based farming production is somewhat stagnant, and if land-based factories start now, bulk harvesting will be delayed until 2028-29. Off-shoring farming is exciting, and there is a lot of room to exploit globally, but (Norwegian) regulations Not yet in place, and tax risk in Norway is asymmetrical to return on investment,” Aukner said.