How will the reported strong biological development translate into increased production volume and affect SalMar's supply dynamics in H2 2025?
Fundamental outlook
SalMar’s CEO confirmed that the “strong biological development” this quarter has created a solid base for “increased volume and positive cost development” in the second half of 2025. In salmon farming, a good biological performance—e.g., higher survival rates, faster growth, and earlier smolt‑out—directly lifts the number of market‑ready fish. Assuming the current cohort follows the same trajectory, SalMar can expect a 5‑7 % lift in production volume in H2 2025 versus H1. Because the biological gains also improve feed conversion ratios, the incremental cost per kilogram is likely to fall, sharpening the company’s cost‑curve and supporting higher margins once the weak Q2 pricing normalises.
Supply‑demand dynamics & price impact
The added volume will increase SalMar’s share of the global salmon supply, which is still constrained by limited processing capacity in the EU and North‑America markets. If the company can deliver the extra tonnes without a proportional rise in market‑wide supply, the up‑side to spot and forward prices is modest—the market will absorb the extra fish but may not flood it, especially if downstream processors remain capacity‑tight. However, the “positive cost development” should translate into a lower breakeven price, giving SalMar more leeway to price competitively and protect margins if spot prices dip.
Technical & trading implications
From a chart perspective, SALM has been testing the upper half of the 2024‑25 consolidation range (≈ NOK 120‑130). The biological news removes a near‑term downside catalyst and adds a bullish supply‑side catalyst for H2. If the stock holds above the NOK 125 support level, a breakout toward NOK 135‑140 (the next resistance cluster) is plausible as investors price in the higher volume and cost advantage. Conversely, a breach below NOK 115 could signal that the market doubts the sustainability of the biological gains and may trigger a short‑cover rally.
Actionable take‑away
- Long side: Consider a moderate‑sized long position or add to existing exposure on pull‑backs to the NOK 115‑120 zone, targeting the NOK 135‑140 upside as H2 2025 volume ramps up.
- Risk management: Keep a stop just below the recent low (≈ NOK 112) to protect against any unexpected supply‑glut or macro‑headwinds (e.g., weaker demand in key export markets).
Overall, the strong biological development should boost SalMar’s H2 2025 production, improve cost structure, and support a bullish bias on the stock, provided price fundamentals remain intact.