Friday, 2 October 2015

Devaluation of Chinese Yuan and its impact on Indian Guar Gum Industry.

In August 2015 China devaluated its currency around 3 % in single week. It leaded to global crises. Economist and market analyst point out that China has taken this step to save its export, which was declining regularly. The declining export was not a good sign for the Chinese economy. China want to maintain its export share in global market.

Indian Guar Gum industry was already facing the crises due to imbalance in demand and supply. In recent year product of Guar gum is increasing continuously and the global demand is coming down due to decline in crude prices. Here I would like to mention that more than 60 % Guar gum is used in Oil and Natural Gas Production Industry. Around 40 % Guar gum is used in other industries.

Guar Guard at guar gum crop cultivation farm 

This devaluation is affecting  Indian Guar gum industry in two way. First china import the Guar Split from India and process it and re-export it. Import export is done in USD but the processing cost comes down and china provide guar gum powder at lower rate than India. This is the first effect. 

In another way China is supplying alternate product of Guar Gum at lower cost than earlier. Xanthon gum is major alternate of Guar Gum powder which is used in other  than Oil and Natural Gas  Industry. There is a lot of requirement of guar gum powder from food processing, processed food, pharmaceutical industry, textile industry, Souse & catchup industry, FMCG industry, liquid shop and detergent industry. China is major producer of Xanthon gum . It is substituting at large scale.

Though Xanthon Gum is not a complete alternate of Guar Gum , but industries are preferring Xanthon gum due to lower price than Guar Gum.

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