Mumbai, Dec 28:The steadily rising export demand may push up guar gum prices to Rs 30,000 a quintal in the new year from the present Rs 23,000 per quintal, according to an industry expert.
“Guar gum prices have risen three times in the local market and five times in the export markets in 2011 following rising demand against low inventories. The strong demand from overseas markets, especially from oil companies, may take the guar gum prices to Rs 30,000 a quintal in 2012 from the prevailing Rs 23,000,” commodities and textile exporter Mr Vinit Chopda told PTI here on Wednesday.
Guar seed and gum prices continued its upward march despite commodity regulator Forward Market Commission (FMC) imposed a 30 percent margin on buyers to curb volatility recently, Mr Chopda said.
The current upward pressure on guar complex prices can be attributed to fundamentals of a rising export demand primarily from oil companies, and lower domestic supply.
India is the world’s largest producer and exporter of this agri commodity, supplying around 95 percent of the world consumption.
Guar gum, a derivative of guar seed, is widely used in oil drilling, paper, textiles, mining, explosives, ore floatation, confectioneries, ice creams, tooth pastes among other daily consumables.
The demand of guar gum by the crude oil industry has gone up four times since 2006. The total requirement of guar gum by the oil industry is estimated at 4,50,000 tonne in 2012.
The country may face shortage of guar gum by 80,000 to 1 lakh tonne this year. According to the industry, the domestic crop output is expected to be close to 10 lakh tonne this year, of which Rajasthan will produce 8.4 lakh tonne.
The total supply, including the current year’s output and the carryover stock in terms of gum yield would be around 360,000 tonne, while the expected demand is 4,50,000 tonne, thereby creating a shortage of around 90,000 tonne, Mr Chopda added.
Guar seed spot prices, which were at about Rs 2,800 a quintal this April, have shot up to Rs 6,900, a rise of about 146 percent. Guar gum prices have also rose even more vigorously, rising 177 percent from Rs 8,300 to Rs 23,000 a quintal.
According to the farm producers body Apeda, guar gum export stood at Rs 1,133 crore in FY10 which more than doubled to Rs 2,812 crore in FY11. And going by the current price spike, the industry expects exports to around Rs 7,275 crore this fiscal.
The industry also demanded imposition of 20 percent export duty on guar gum to generate revenue to the exchequer.
“Recently, China introduced import duty on guar gum powder and splits. If our government considers imposition of export duty, countries like China would be forced to roll back duty on guar gum and the benefit would accrue to us,” the exporters body Fieo former president Mr Ganesh Gupta said.
The withdrawal of incentives and imposition of export duty would result in a substantial revenue generation and savings to the exchequer, Mr Gupta said.
Source : thehindubusinessline.com