SEAFOOD.COM NEWS [BANR Japan Reports] Tokyo March 11, 2010 - Japanese dealers are wary about escalating information and rumors surrounding Chilean salmon shipments in the wake of the earthquake, but foresee a medium- and long-term impact of the quake. (note: A new 7.2 magnitude aftershock hit parts of Chile today) The impact of the recent earthquake in Chile on the frozen salmon market in Japan has so far been reportedly minimal. It has been to the luck of Japanese dealers that bulk of Chilean coho has already been shipped. The commodities currently subject to shipments are limited only to trout products, for which production has originally been at a low level. However, the 'information battle' has heated up in the wake of the earthquake, with exaggerated rumors flying around from time to time. Dealers are worried about the difficulty in obtaining true information, and hope that calm would prevail in the industry. There have been no reports to date that farm sites and land-based hatcheries and fresh-water facilities in Chile have been destroyed. Most damage in the sector has been indirect, including breakdown of some office buildings, loss of containers, some delay in shipments due to shutdown of transportation networks and destruction of port facilities, and possible degradation of product quality caused by suspension of electric power supply. But, as major fishmeal plants are concentrated in Concepcion near the epicenter of the quake, there is, depending on the degrees of damage, a possibility of further rise in feed prices for farming, which could press producers hard by pushing up production costs. Summing up the current pieces of information, Japanese observers see that there are more worries about medium- and long-term impact than immediate repercussions. On the other hand, an increasing number of market participants are wary of the escalation of rumors which apparently aim to prop up sales of Chilean coho and trout at hand, amid the shrinking market in Japan now in a deflationary economy. In this season, Chilean coho was subjected to wild fluctuations of exchange rates. The average purchase costs for importers who went for positive buying stood at Y520-530 per kilo (for dressed products 1 of 4-6 pound.) Conversely, the central prices for Japanese consumers barely reached Y500. Conversion into raw material prices did not advance smoothly because of sluggish tei-en (dipped in salted water) product prices. However, even among distributors who watched the events from the sidelines, some admitted that salmon prices were tightened to some extent. 'The prices in the order of Y400 per kilo almost disappeared from the market. It is highly probable that Y500 will become the baseline price for good-quality products in the days ahead,' they said. At the same time, others are voicing a warning against the rampant mis-information surrounding Chilean salmon. 'It is evidently wrong to try to instigate the market when we look at the actual state of consumption which does not reflect the supply-demand situation,' they observed. 'There is no reason to expect that only salmon prices will go up while over-the-counter prices of many other commodities are on a downturn,' they added. The same can be said about trout. Importers and marketers are cautious about the entry of new products. 'The trading prices have certainly been bottomed up as supply of Chilean trout decreased. But Japanese dealers who jump on buying North European trout, which fetch a price gap of more than Y100 from Chilean products because of active shipments to Russia, will definitely face difficulty in selling them in Japan,' noted a trader. There is a concern that there may be raw material shortage prior to the Golden Week holiday in early May if shipments from Chile are delayed. A marketer observed: 'This is a time when high prices are not accepted in the market. There may be a need to make distinction between trout for sashimi (that can compete with tuna) and that for salted slices.'