Aquaculture & Poisson d'eau douce

Trade war between China and the United States of America creates opportunity for Vietnamese growth

The value of Viet Nam’s pangasius exports is expected to have reached USD 2.2 billion in 2018, with Chinese demand as the primary driver of revenue gains and high prices. The completion of a free trade agreement with the EU28 and a continuation of the trade war between the United States of America and China may revitalize sales in these other key markets in the coming years.


Total global production of farmed pangasius in 2018 is estimated to have reached some 2.8 million tonnes, an increase of some 6 percent compared with the previous year. Vietnamese production, concentrated in the Mekong Delta, accounts for around 45 percent of this total and 2018 harvests there are reported to be just below 1.3 million tonnes. Challenges with fingerling availability in Viet Nam earlier in 2018 caused some supply tightening, contributing to a sharp upward price trend. Industry expansion continues in Viet Nam, with farms getting larger and more high-tech. The latest major project, which is reportedly Viet Nam’s largest ever, is a 200?000 tonne annual capacity site that will occupy 600 hectares in An Giang Province, expected to start operating in the fourth quarter of 2019.

Viet Nam’s share of total global production is declining slowly though, primarily due to relatively faster growth in Indonesia, India and Bangladesh. Each of these countries now represents 15–20 percent of global production. Meanwhile, in China, what is still a small pangasius farming sector is expanding rapidly as the powerful Chinese aquaculture industry has begun to respond to strengthening domestic demand for the species, most of which is currently supplied by Viet Nam. Industry reports now suggest there are 20 factories processing farmed pangasius produced in South China. The estimated production capacity of the Chinese sector is only around 30?000 tonnes at present, meaning it will be some time before it represents a real competitor to Viet Nam in terms of volume.


China’s importance as a market for pangasius continues to expand, and it is becoming an increasing focus of Vietnamese marketers. Despite the good reputation of Vietnamese product in China, however, there is an awareness that China’s own aquaculture sector has the potential to supply a significant proportion of the market. In response, the Vietnam Association of Seafood Exporters and Producers (VASEP) is exploring the possibility of establishing a market development fund which would facilitate brand building and sales networking abroad, an approach similar to that followed by the Norwegian seafood industry. The industry in Indonesia is pursuing a similar strategy to target markets in the Middle East, promoting a national brand at the Seafex trade show in Dubai in late 2018. Indonesia has been emphasising its less intensive farming methods to carve out a market segment for itself in a global market whose supply is dominated by Viet Nam. A significant proportion of Indonesian production is still absorbed by its domestic market, and the same is true for Bangladeshi and Indian output.


According to VASEP’s own figures, Viet Nam exported pangasius worth USD 1.59 billion in the first nine months of 2018. This is an increase of 23 percent compared with the same period in 2017, primarily a consequence of higher price levels during the year. China and Hong Kong SAR secured their combined status as Viet Nam’s most important export market in 2018, with VASEP figures indicating that USD 377 million worth of pangasius were exported in the first three quarters of the year to these two markets. This represents approximately 24 percent of Viet Nam’s export revenue over this period.

Demand for Vietnamese pangasius in the Association of Southeast Asian Nations (ASEAN) region continues to grow, and exports to ASEAN markets reached USD 146 million in the first nine months of 2018, up 44 percent from the same period in the previous year. Thailand, the Philippines and Singapore all saw double digit growth for this period. VASEP reported particularly good performance in the third quarter of 2018, driven by a jump in sales to the US market, likely driven by a need to secure whitefish volumes before the anticipated hike in China-origin import tariffs in early 2019. During the review period, Vietnamese exports to the US market increased 43 percent to USD 369 million.

After a number of years of negative growth, Viet Nam’s pangasius exports to the EU28 grew by 14 percent in the first nine months of 2018, to reach USD 176 million. The United Kingdom was the only major EU28 market registering a decrease, a reversal of the prior long-term trend that saw positive growth due to mainly successful retail campaigns, while the overall share of the EU28 declined.


Strong growth in China and the rest of Asia, an improvement in demand from the United States of America and the EU28, and a fingerling shortage in Viet Nam all combined pushed up pangasius fillet prices to USD 3.30 per kg (FOB Ho Chi Ming). This marks a significant improvement from the USD 2–2.5 per kg recorded for the majority of 2016 and 2017.


Viet Nam’s position in both the United States of America and the EU28 markets will likely be strengthened. The first is the trade war between China and the United States of America. The US administration announcement about import tariffs on a range of China-origin products including tilapia, will potentially provide a shortage in the whitefish segment that pangasius can fill. This shortage will likely be exasperated by expected tightening in global wild groundfish supply in 2019. At the same time, Viet Nam finalized the details of a free trade agreement with the EU28 in 2018, and its potential approval in 2019 will see the current 5.5 percent import duty currently levied on the majority of pangasius products removed after a period of 3 years. Combined with an expected slowdown in Vietnamese production growth, the improved demand outlook on international markets should keep prices relatively high in 2019. While expansion will be faster in other producing countries, including in China, much of this output is consumed domestically and Viet Nam remains by far the most important supplier of the international market.