Indian shrimp exporters see relief from US holiday demand

Alongside India, Ecuador, Indonesia, Thailand, Vietnam, and China largely dominate the US shrimp import market

Indian shrimp exporters are eyeing a short-lived boost as US holiday demand picks up, offering some respite from weak prices and tariff concerns, according to executives.

Exporters like Avanti Feeds and Apex Frozen Foods flag that the short term impact from the 50 percent tariffs may not be significant. The companies are seeing buying activity from the consumers with some even ready to absorb full tariff cost.

"The November-December period is the holiday season in the US, where they require shrimps a lot, where people are eating out and preferring to eat seafood. So the retailer, from what I understand, would like to continue having product on their shelves. So, there are shipments continuing. So the short-term impact is not as large as we anticipated,"  DVS Satyanarayana, chief financial officer at Avanti Foods said during a post earnings call in August. The company has nearly 48 percent of India’s shrimp exports directed to the US.

The Hyderabad-based company is the largest shrimp feed manufacturer in India, supplying feed to thousands of aquaculture farmers, and also runs processing plants to export frozen shrimp mainly to the US, Europe, and Japan.

Alongside India, Ecuador, Indonesia, Thailand, Vietnam, and China largely dominate the US shrimp import market. The imposition of reciprocal tariffs along with penalty on shrimp-exporting nations like India is poised to change the competitive landscape. Ecuador, levied with only a 10 percent tariff, stands to gain massively. Currently, Indian exporters face 50 percent tariff which includes additional 25 percent levy as a penalty for buying crude from Russia.

However, exporters see that some consumers in the US are open to absorb full 50 percent tariff costs to cater to the upcoming holiday season, intending to pass on the costs to end consumers.

"There have been commitments and for certain orders, which are to be received before the holidays, some of the customers did acknowledge to even absorb the 50 percent. They are willing to absorb these tariffs and which means they will be charging the consumers also. But not all of them, there are customers who also have canceled orders. There are customers who are asking to not ship or rather they are looking at other origins," said  Karuturi Chowdary, managing director and chief financial officer, Apex Frozen Foods.

India's frozen shrimp exports are distributed across North America, Asia, and Europe, with the US and China being the top two destinations. Ratings agency Crisil said that  shrimp export volume is set to fall 15-18 percent this fiscal and realisation too will take a hit amid tariffs, even as exporters look to change their product mix and scout for alternative export destinations.

Meanwhile, exporters are also looking to focus on the domestic market as an alternative to exports.

"We have a big population in India, and the consumption of shrimp is very, very low. So, this is the one opportunity that has come in the way.  With the government support, we hope that we will be able to promote the domestic market sales as well," Avanti Feeds managing director Ramachandra Rao said during a call with analysts last month.