China Pork Offal Imports Down in 2018

China's pork imports through November 2018 were down from a year earlier, reflecting mainly lower offal imports from the United States. Imports of muscle cuts were down less than 1 percent, year-on-year, but imports of offal were down 21 percent. China's African swine fever epidemic has not affected its pork trade yet, but the industry is reportedly shedding production capacity due to disruptions of internal hog marketing and gloomy prospects for controlling the virus.

China's pork imports were likely impacted both by domestic market conditions (a plunge in domestic prices earlier in the year suppressed demand for imports) as well as the trade war. The United States supplies predominantly offal (organs, feet, snouts, etc), and the decline in offal shipments from the United States accounts for most of the decline in offal imports. Imports of muscle cuts from other sources did not offset the 68,495 metric-ton decline in imports of U.S. muscle cuts.

China pork imports, January-November
HS code	Description	Jan-Nov 2017	Jan-Nov 2018	Change
		Metric tons
All imports:
0203	Pork	1,105,374	1,097,445	-7,929
020649	Pork offal	1,119,214	883,631	-235,583
From United States:
0203	Pork	152,536	84,041	-68,495
020649	Pork offal	369,446	172,685	-196,761

Pork imports (muscle and offal combined) peaked in March, then began falling as Chinese domestic prices declined and as China assessed successive 25-percent tariffs on U.S. pork in April and July. Imports of U.S. pork surged to over 60,000 mt in March, than shrank from 35,000 mt in April to 5,800 mt in November. Although they declined sharply, China never completely stopped imports of U.S. pork, despite 50-percent retaliatory tariffs.

In November 2018, the share of China's pork imported from the United States shrank to 3.6 percent as China imported from a number of other pork suppliers in Europe and the Americas. From April to November 2018 (when China's tariffs on U.S. pork were in place) China's largest pork suppliers were Spain (16 percent share), Germany (15 percent), and Canada (13 percent). The share of pork imported from the United States during those months (10 percent) was comparable to shares from Denmark (10 percent), the Netherlands (9 percent), and Brazil (8 percent). Other significant suppliers included France (6 percent), Ireland and Chile (3 percent each).

China's African swine fever (ASF) epidemic has not significantly impacted pork imports yet. Restrictions on transportation of swine and pork have created excess supplies and depressed prices in pork-producing provinces unable to ship animals or pork to other provinces. Prices are elevated in pork-deficit provinces. A Soozhu.com commentary this week observed that hog prices are as low as 8 yuan/kg in surplus provinces and 20 yuan/kg in net-consuming provinces. The commentary observed that China is now in a protracted war against ASF and the war of low prices is just beginning.

The disease has now been confirmed in 23 of China's 31 provinces, and customs officials discovered ASF in two shipments of blood meal from slaughterhouses in Tianjin intended for export. In Guangdong Province, one of the previously disease-free deficit provinces, cases of ASF were confirmed this month at a slaughterhouse and two farms, causing "panic slaughter," tumbling prices, and restrictions on shipments within the province. Shortages were a concern in the city of Shenzhen which has no local pig supplies.

China's overall domestic pork supplies seem to be adequate at present, but supplies are expected to be tighter in 2019. Soozhu.com notes that big companies and small farms both expanded production aggressively during the price-peak in 2016, but this year tumbling prices, disruption of cash flow and biosecurity requirements are pushing small-scale producers out of production, while remaining producers are cautious about adding capacity. Restrictions on inter-provincial shipments have hurt big companies specialized in breeding and propagation, but the Ministry of Agriculture loosened restrictions on shipments of piglets this week.