Chapter 101 - 88: The Emperor of Oil
Chapter 101: Chapter 88: The Emperor of Oil
Jiang Miao and his group had just returned to Magong Town.
They received some good news.
A trading company from Western Europe specializing in high-end aquatic products had reached out in the past few days, seeking to collaborate.
Huang Jiahao, head of the International Trade Office in the Sales Department, briefed Jiang Miao on the situation.
"Boss, Aiken Company has ordered 100 kilograms of glass eels from us at a price of 23,000 yuan per kilogram. They’ve also signed a one-year long-term supply contract, requiring us to provide at least 200 kilograms of glass eels per month."
Jiang Miao wasn’t too surprised by this quantity.
This was because people in Europe and America don’t typically eat mature eels. Instead, they prefer to eat eel fry at the glass eel stage, consuming at least several hundred tons annually. However, the glass eels they consumed were Atlantic eels, with the main source being the Sargasso Sea in the North Atlantic Ocean.
In recent years, due to global climate change, overfishing, and environmental pollution, the catch of wild Pacific Eel fry has plummeted. Atlantic eels have not been able to escape the consequences of human activity, either.
As the catch of wild eel fry continued to decline, prices naturally climbed year after year.
Under these circumstances, news that a company in Asia had developed artificial eel breeding technology was bound to attract related businesses looking to collaborate.
Jiang Miao mentally calculated his company’s current production capacity for eel fry.
The breeding base could produce approximately 60.8 million glass eels per month, which translated to about 6 tons by weight, or around 72 tons per year.
However, they were currently in the process of renovating the indoor breeding facilities, adding two levels of elevated tanks to increase the production density per unit area.
With these renovations, Hailufeng Company’s monthly production capacity for glass eels could increase to around 18 tons by this August.
’This capacity is just right—not too much, not too little.’
As far as he knew, Rokkaido Eel Company’s planned monthly output of glass eels wasn’t high, only around 15 to 20 million.
The main reason for this low number was that Rokkaido Eel Company was worried that if other companies replicated the technology, they wouldn’t be able to recoup their investment, so they didn’t dare to expand recklessly.
After all, the costs of land, materials, labor, and utilities in East Japan were all relatively high. Blindly expanding their investment was simply too risky.
In fact, with a monthly output of 15 to 20 million, Rokkaido Eel Company could already capture roughly 70% of the market in East Japan. Over the past three-plus months, they had sold at least tens of millions of US dollars’ worth of eel fry.
Given the current situation, Rokkaido Eel Company would most likely not choose to expand recklessly before earning back the thirty million in technology licensing fees.
After all, Rokkaido Eel Company was well aware of its production costs; it simply couldn’t compete with Hailufeng Company on the international market. Watanabe Junichi felt that capturing 70% of the eel fry market in East Japan was his company’s limit.
As for why they couldn’t capture 100% of the market?
That was, of course, because some farms would still catch wild glass eels themselves or purchase eel fry from Hailufeng Company.
This was also the very reason Jiang Miao had been willing to license the technology to Rokkaido Eel Company; they posed no threat to Hailufeng Company’s position in the international market.
As for Brown Company, they were still in the technology verification phase and were not expected to begin mass production until the end of this year. They had also informed Hailufeng Company of their planned production capacity, which was 5 to 10 tons of eel fry per month.
As for why they weren’t increasing capacity, there was a tacit understanding among all parties.
This level of production was the sweet spot; combined with the wild catch, it was just enough to meet the global market’s demand for eel fry.
If production exceeded this level, it would inevitably cause a major collapse in market prices.
If they could maintain high prices with a limited supply, why expand production capacity?
Why ask for trouble?
Jiang Miao looked at the market research report in his hand, which clearly laid out the global consumption situation for eel fry.
Last year, the world consumed a total of about 190 tons of eel fry. The breakdown was: 33 tons in the North American Region (for consumption), 76 tons in the European Union (for consumption), 8 tons in other regions (for consumption), and 73 tons in the East Asia Region (for aquaculture).
Of this total, 7 tons came from artificial breeding and 183 tons were caught in the wild.
This year, however, that situation was bound to reverse, with the output from artificial breeding soon to surpass the scale of the wild catch.
Hailufeng Company would produce 18 tons of eel fry per month, for an annual total of 216 tons.
This capacity was needed to satisfy the mainland’s annual demand for 50 to 60 tons of eel fry, a market that was still growing. Great Ryukyu also required about 5 tons, and the East Japan market would need to purchase around 10 tons from Hailufeng Company.
The remaining hundred-plus tons of eel fry would be sold entirely to Europe and America, as they ate the fry directly and their consumption volume was much larger.
As for why trading companies in Europe and America were willing to buy, the reason was simple: it was profitable.
In America, the retail price for glass eels could reach about 5,000 US dollars per kilogram, equivalent to 35,000 Hua Yuan.
In Western Europe, the retail price for glass eels was around 3,500 Euros per kilogram, equivalent to 27,000 Hua Yuan.
The dwindling wild eel catch, combined with increasingly strict animal protection measures in Western Europe, was causing major headaches for many businesses that dealt in high-end aquatic products.
Now, some well-informed companies in the industry had already learned that Hailufeng Company in Asia had developed artificial eel breeding technology, and were thus eager to make a move.