Guar gum prices slide in global crude oil glut

Oversupply of crude oil in the world market has led to near halving of oil drilling activities in North America in the past four months, thereby affecting the offtake of guar gum in India as well.

Prices of guar gum, a key ingredient in oil drilling, have fallen nearly 50 per cent since April and the slide is continuing.

“There is an overall slowdown in the global market and we are expecting a bigger impact following the economic slowdown in China. Prices of guar gum have fallen significantly and going ahead there may be a further drop,“ said Rajesh Kedia, director, Jai Bharat Gum & Chemicals.

Oil prices fell over 2 per cent to about $52 on Tuesday, dropping for the fifth successive session amid persistent worries about a global supply glut and exacerbating concerns in the guar gum industry. “Prices of guar gum, which were hovering around Rs 150 a kg in April have dropped to Rs 80 a kg.

Nearly 80 per cent of the manufacturing units have shut down temporarily to tide over the present crisis,“ said Kedia. There are 300 such manufacturing units spread across Rajasthan, Haryana and Gujarat. In the past four months exports have dropped 60 per cent, compared to the year-ago period, to 20,000 tonne.

India is a leading exporter of guar gum, commanding about 80 per cent of global production, followed by Pakistan. Guar gum is derived from guar seeds (cluster beans), a legume crop that grows in semi arid regions of Rajasthan, Gujarat and Haryana.

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