NEW DELHI: Guar gum prices have risen 30 per cent over the rate four months ago as demand has revived from the oil exploration sector in the US, China and Russia and food processing sector in Europe.
The uneven spread of rain in the key sowing area of Rajasthan was also supporting the prices, said exporters.
At Rs 60 a kg, guar gum is 30 per cent more expensive than its low of Rs 46 per kg in April, said Sohan Jain, secretary of the Guar Gum Manufacturers’ Association. He added that guar seed prices also saw a 28 per cent increase to Rs 41 a kg in the same period.
“The demand by the oil drilling sector, which accounts for 70 per cent of total exports, has slowly started and by September, we can expect further orders,” said Jain. He added that the uneven spread of rains has also attributed to the increase in prices.
In 2019-20, guar gum exports were at 381,880 tonnes and valued at Rs 3,261.60 crore with the US accounting for 34 per cent of the total exports.
“In the beginning of August, we have started signing contracts with buyers, leading to an increase in prices. Companies are buying on a need basis as uncertainty continues,” said BD Aggarwal, managing director of Vikas WSP.
Aggarwal said major buyers were currently US companies like Schlumberger, Halliburton and Baker Hughes. Demand has also started from China National Petroleum Corporation and Russian firms Gazprom Neft and Tatneft, he said.
Bheru Jain , CEO of Rajasthan Gum, said that demand for food grade guar gum has increased 20 per cent over the previous year with major buying in Germany, France and the UK. “Oil drilling activity has just resumed in US and we are waiting to see how it progresses,” he said.
Guar is seeing support from improving exports and domestic demand after lockdown, said Ajay Kedia, director at Kedia Advisory. He said he sees guar seed prices consolidating in the range of Rs 3,850-4,250 per quintal over the next few weeks.
“Low rains in Rajasthan and farmers shifting to other crops such as cotton and moong may also lead to increase in prices in the coming months,” he said.