North America puts its drilling projects on hold, guar slips

KOLKATA: Guar prices plunged to seven-year lows as demand waned from the North American-oil drilling industry, which is putting projects on hold amid a drop in crude prices. Experts said the plunge in guar may force farmers in the main producing states of Rajasthan, Gujarat and Haryana to shift to other crops in the next kharif crop season that begins in April.

“Last year during this time, guar seed price was Rs 60 a kg. But now, it is available at Rs 32 a kg,” Rajesh Kedia, director at Jai Bharat Gums & Chemicals, told ET. “Similarly, the guar gum splits are now fetching a price of Rs 65 a kg compared with Rs 150 a kg last year. Prices of both guar seed and gum touched seven-year lows as there is hardly any demand from the North American oil drilling industry.” Exports of guar gum shot up in 2012-13 as farmers took to the crop to ride the US-shale boom.

The crop earned Rs 21,287 crore in exports in 2012-13 as against Rs 121 crore in 2003-04. Guar gum is used by drilling firms to thicken water that is mixed with sand and pumped through shale rock cracks to extract gas. India is a leading exporter of guar gum and commands 80% of global production, followed by Pakistan.

Guar gum is made of guar seeds, a legume that grows in semi-arid regions. A dry spell during kharif season this year pushed the acreage under guar down to 46 lakh hectare from 52 lakh hectare a year ago. “We expected the output to be over 20 LT when sowing began. Due to patchy rains, output declined,” said P K Hissaria, exresident, Indian Guar Gum Manufacturers’ Association. The continuous slide in crude prices has affected the guar gum offtake from India.