Guar gum prices slide on weak export demand

Guar gum is used by drilling cos to thicken water that is mixed with sand and pumped through shale rock cracks to extract gas

Guar gum prices have fallen 35 per cent in four months, owing to weak export demand.

According to industry sources, the constant drop in crude oil prices have seen a decline in gum demand globally by almost 50 per cent from importing countries. Guar gum is used by drilling companies to thicken water that is mixed with sand and pumped through shale rock cracks to extract gas

Also, good sowing in the current kharif season and expectation of higher carryover stock has put increased pressure on gum prices. From Rs 130 a kg four months earlier, these have fallen to Rs 75-78 a kg.

Guar gum is derived from guar seeds (cluster beans), a legume crop grown in the semi-arid regions of Rajasthan, Gujarat and Haryana. In 2014-15, the production of seed was 1.75 million tonnes and this led to extraction of nearly 450,000 tonnes of gum. Exports were no more than 375,000 tonnes.

“Due to a dip in demand since January, we are expecting around 800,000 tonnes of carry-forward stock in seed by the end of October. And, ongoing kharif sowing has increased, which is also likely to impact the price of gum”, said Girdharilal Sharda, president of the All India Guar Gum Manufacturers Association.

He said monthly export during April to July was 22,000-25,000 tonnes, compared to about 50,000 tonnes a month for the same period in 2014.

The Rajasthan government's agriculture department says as on August 3, sowing of seed was on 3.46 million hectares as against 2.23 mn ha in the corresponding period last year. In Gujarat, another 145,000 ha was registered as having been sown with guar by the second week of August.

According to industry sources, demand is unlikely to rise till September. Manufacturers estimate about 475,000 tonnes of gum production for the next season.