Guar gum demand brings back cheer after 2 years

KOLKATA: After a gap of two years, guar gum demand from the food sector has brought back cheer to the domestic guar gum industry.

Guar gum, the powdered endosperm of guar beans, is in demand in Germany, Latin America and China, who are importing the commodity for the food sector. China, leading the race, is expected to import 90,000 tonne of guar gum this year compared to 50,000 tonne last year.

The industry expects the 2014 guar gum exports to be around 5.5-6 lakh tonne due to the revived demand from the food sector and the growing usage of the commodity in the oil drilling sector. In 2013, the exports was 3.25 lakh tonne as there was not much demand from the overseas food industry and many countries had used cheaper alternatives for oil drilling.

Guar gum is used as a thickening agent and as an additive in a wide variety of food and dairy products such as yogurt, ice cream, soft cheese, bread, pasta, ham, sausages, prepared fish and pastries. It is also used as an animal feed. Petroleum exploration companies use it as a sealant in oil and gas well drilling.

The demand for oil drilling sector is also on the rise. Talking to ET, Rajesh Kedia, director of Jai Bharat Gum & Chemicals, said Chinese and American oil drilling companies that had shifted to cheaper alternatives such as carbon methyl cellulose and xanthane gum because of a sudden surge in guar prices in 2012 are once again back in the market. The demand from the oil and gas sector is growing at the rate of 8-10%," he said.

Halliburton and Baker Hughes are the two major buyers of India's guar gum. The companies drill and complete oil and gas wells using a pressure-pumping technique known as fracking, which blasts water mixed with sand and chemicals underground to free trapped hydrocarbons from shale formations. Guar is made into a thick gel and is used for carrying sand down to a well and into the cracks created from fracturing.

But despite the rising demand of guar gum, prices have remained stable as the production has been good during the kharif 2013. According guar gum traders, price of guar gum is being available in the Jodhpur mandi at about Rs 135 per kg. Guar seed is being traded at Rs 50 kg.

"Prices will continue to remain stable over next two to three months," observed Kedia.

India is a leading exporter of guar gum and it commands about 80% of global production, followed by Pakistan. Guar gum is made out of guar seeds (cluster beans), a legume crop that grows in semi-arid regions of Rajasthan, Gujarat and Haryana. Production in kharif 2013 is higher by 39% higher at around 25 lakh tonne.