After a dizzying spike and free fall, guar-gum prices likely to stabilise

KOLKATA: Guar-gum prices that went on a free-fall after reaching dizzying heights two-and-half years ago, are likely to firm up this year from 2013 levels, because of an expected drop in the output of this material used in shale-gas production.

Output of guar seed, the bean from which guar gum is made, is expected to be 25-30% less this year compared with the Kharif, or summer-sown, season of 2013, industry executives said.

Patchy rains across major guarseed producing states of Rajasthan, Gujarat and Haryana are likely to bring down the crop to 15-16 lakh tonne from the 22 lakh tonne harvested a year earlier.

In addition, demand for guar gum has emerged from non-traditional markets like Brazil, Argentina, New Zealand, Mexico, Russia, Vietnam and China where oil-sector activities have picked up in recent months.

The gum is used by drilling companies to thicken water that is mixed with sand and pumped through shale rock cracks to extract gas. It is also used as a thickening agent in products like icecream, bread, pasta, sausages and pastries.

Stocking up of the material by US oil explorers in 2012 on fears of a drought in India, which supplies 80% guar gum globally, had driven up its export price to as high as $27,000 a tonne ­ more than Rs 16 lakh, or Rs 1,600 a kilogram, at the current exchange rate ­ in May that year.

Since then, the price has been falling to as low as Rs 110 a kg in November last year. “Though the harvesting season of guar seed is advancing, 50% of the crop is yet to be matured. This is likely to bring down guar-seed production,“ said Rajesh Kedia, director, Jai Bharat Gums & Chemicals, a Haryana-based guar-gum producer for the oil industry. “At best, we can achieve a production of 17 lakh tonne.Last year we had a bumper crop of 22 lakh tonne. There is a carryover stock of 5 lakh tonne from last year.“