Talking with NutraIngredients today at the Vitafoods Asia event in Hong Kong, Baldur Hjaltason, EPAX strategic business development executive and chairman of the Global Organisation for EPA (eicosapentaenoic acid) and DHA (docosahexaenoic acid) Omega-3 (GOED), said already maxed-out fish stocks are going to struggle to meet omega-3 oil demand forecast at ongoing 7-8% annual growth by market analyst, Frost & Sullivan.
“The main fisheries in Morocco and Peru are near capacity, so you have to ask the question: Where is the omega-3 going to come from if it keeps growing as it forecast to? Algal oils may be able deliver more but can they deliver the high dose EPA oils that are increasingly being demanded by the pharma sector? But there are algal oil companies transferring their energies from biofuels to omega-3 oils so that offers some potential.”
“There is also plant research going on but that might be 10 to 15 years before it reaches commercially viable levels, so the industry has a problem it needs to tackle now.”
Supply pressure
At Frost & Sullivan forecast growth rates, the 2011 global omega-3 oil output of 110,000 tonnes will increase by 8000 tonnes per year, with further pressure being put on this figure by the rise of pharma demand, which requires more raw oil to deliver the high-purity doses required in that sector.
There may be excess capacity in US menhaden fisheries, Hjaltason observed, but again, this source did not deliver oils with high-dose potential and hence was used mostly for animal feed.
Other research such as that into fungus being conducted by DuPont also was a long way from delivering anything of commercial value.
Price pressure
Hjaltason warned the situation could lead to an omega-3 oil price hike from exiting levels of about $2300-$2500 per tonne for refined oils, that may ward off potential manufacturer interest.
That said, fish oil specialist EPAX had no intention to buy into the algal sector, but was scrutinising the market for potential supply partners.
“We will be a buyer of algal oils when it is economically viable. We would rather pursue this strategy as it offers us more flexibility.”
Hjaltason also noted a trend where Chinese suppliers were shifting production to the US so that oils could be sold back into China and other countries as “Made in the USA”.