Now is not the same as 2015-2020 for Tassals, when salmon was...

Now is not the same as 2015-2020 for Tassals, when salmon was mature and prawns non-existent. Now is more like 2010-2015, when Salmon capex reduced just as salmon revenues really ramped up. This time is not different for the prawns. The problem is not the investment per se, it's the timing. It's hard to make money on high CAPEX companies at maturity, particularly if they are reinvesting into new areas.

Anyway, see the export price collapsing to ~50NOK? That was a bit quicker than expected, was thinking 55NOK may be the floor. Turns out the Europeans are having a great growing season now, and supply is exceeding demand in the near term. I think this is a temporary measure, though we are seeing A LOT of new investments in salmon expansion by the Norwegians.

I would note however two things. First, futures are actually holding up really well. The fundamentals in the market still solid. And generally we are exporting into the high prices being in the southern hemisphere.


Second, this is actually not our market that we're exporting into at the moment. Those export prices are not translating to China. This was noted on the recent call too. Essentially, China has air freight limitations from Europe so Australia is getting a price premium for what it can get into there. Moreover they have just announced new regulations for Norwegians - not sure if this impacts on Tassals.

The bottom line is, Tassal should have been exporting more in late FY21, they need to be emptying those freezers if the price in China is still high, otherwise we will be pushing back exports into 2H22. Something to keep an eye on.