Lok Sabha election result and its impact on business of Indian Guar Gum Industry. The Lok Sabha election results in India wield significant influence over the Indian Guar Gum industry. Guar Gum, a crucial export commodity, is heavily reliant on government policies, trade relations, and economic stability. A favorable election outcome often translates to a stable government, fostering a conducive business environment. Such stability encourages investor confidence, promotes economic growth, and enhances the prospects for industries like Guar Gum.
A government committed to supporting agriculture and exports could implement policies favorable to Guar Gum producers, such as subsidies, incentives, and trade agreements. Additionally, political stability typically correlates with steady demand from both domestic and international markets, driving production and revenue for Guar Gum businesses. Conversely, an unfavorable election outcome or political instability may lead to uncertainty in the business environment. Unclear policies, trade disruptions, and economic downturns can hinder investment and dampen market demand for Guar Gum products. Fluctuations in currency exchange rates and trade tariffs can also impact the competitiveness of Indian Guar Gum exports on the global market.
Therefore, the outcome of the Lok Sabha elections holds significant implications for the Indian Guar Gum industry. It can influence production levels, market dynamics, pricing trends, and overall business sentiment, shaping the industry's growth trajectory in the short and long term. Guar seed and Guar gum will have strong demand in 2024-2025.Guar gum is derived from the Guar plant grown in Indian in Rajasthan and surrounding states specially Thar desert area. India is only major producer of guar in world. India supply guar to entire world to different industries.
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| Lok Sabha Election 2024 result and Indian Guar Gum Industry |
The current demand of guar from different industries.
The demand for guar gum is experiencing significant growth globally, driven by its versatile applications in various industries. In the food sector, guar gum is widely used as a thickener, stabilizer, and emulsifier, contributing to its increasing demand. The rising popularity of gluten-free products and the preference for natural, clean-label ingredients are major factors propelling its use in food and beverages.
The oil and gas industry also plays a crucial role in the demand for guar gum, especially in hydraulic fracturing operations where it is used to enhance the viscosity of fracturing fluids. The expansion of oil and gas exploration activities, particularly in the United States, is expected to boost the market further. Additionally, the pharmaceutical industry is leveraging guar gum's binding and thickening properties in various formulations, contributing to its rising demand. This trend is particularly notable in markets like Germany. Overall, the global guar gum market is poised for continued growth, driven by its diverse applications and the increasing shift towards natural and sustainable ingredients.
What will be the demand of guar gum in Near Future?
The demand for guar gum is set to rise in the near future, driven by its diverse applications across multiple industries. The food and beverage sector will see increased use due to its properties as a thickener and stabilizer, particularly in gluten-free and clean-label products. The oil and gas industry will continue to contribute significantly, as guar gum is essential in hydraulic fracturing operations. Additionally, its role in pharmaceuticals as a binder and thickener will further bolster demand. Overall, the guar gum market is projected to grow, reflecting its expanding utility and consumer preference for natural ingredients.
How will be the market demand of the natural thickeners and gelling agents?
Guar gum is the natural thickener and gelling agent. It is used in various industries for this property unique. The demand for natural thickeners and gelling agents is experiencing significant growth, driven by their extensive applications in various industries, particularly food and beverages. These agents, which include gelatin, pectin, agar, and carrageenan, are used to enhance the texture, stability, and mouthfeel of products like bakery goods, confectionery, meat products, and ice creams.
In 2022, Europe dominated the market due to the presence of key players and a strong confectionery segment. The global market for these agents is projected to reach USD 17.1 billion by 2030, growing at a compound annual growth rate (CAGR) of 5.5% from 2023 to 2030. The food and beverage industry remains the largest end-use sector, but there is also notable demand in cosmetics, personal care, and pharmaceuticals.
Recent market trends highlight a shift towards natural and plant-based sources, driven by consumer preferences for clean-label and eco-friendly products. Innovations and expansions by companies such as CP Kelco and Cargill are also contributing to the increased availability and application of these natural additives. Overall, the market outlook for natural thickeners and gelling agents is robust, with ongoing developments and a growing focus on sustainability and natural ingredients. Guar gum has plus point that it natural ingredient and it is biodegradable.
Exchange rate of Indian Rupee and United States Dollar .
Guar is an export oriented commodity so the INR/ USD plays vital role in international trade and demand The future outlook for the INR/USD exchange rate indicates potential fluctuations influenced by various economic factors. In the short term, the exchange rate is expected to remain in the range of 82 to 84 INR per USD, with a gradual tendency towards the lower boundary of this range by late 2024.
The Reserve Bank of India (RBI) is anticipated to continue its interventions to manage rupee volatility and imported inflation, leveraging its substantial forex reserves. Meanwhile, analysts at Goldman Sachs predict the Indian rupee might appreciate to 81 INR per USD by the end of 2024, supported by strong foreign capital inflows and the RBI's proactive measures. Long-term projections suggest that by 2025, the exchange rate could average around 80 INR per USD in mid-year, potentially rising to 86.97 INR per USD by year-end if global economic conditions deteriorate. Overall, the future of the INR/USD exchange rate will be shaped by US monetary policy, global oil prices, and India's economic performance.
With strengthening of USD / INR exchange rates. There will be pressure on demand and supply. Buyer will have to pay more to match the current rate. Exporter will replay on international prices and lesser rupees will come for the export of the guar gum to match the international demand.
Impact of current Oil Rig Counts on guar gum industry
Oil rig count is major indicator for the guar gum export demand. Most of guar gum is used by the oil and natural gas exploration and production. As of the latest data from May 31, 2024, the U.S. oil rig count stands at 496, reflecting a slight decrease from 497 the previous week and a significant drop from 570 rigs a year ago. This represents a 12.98% year-over-year decline. The total number of U.S. rigs, including both oil and gas, is 674, down by six from the previous week, marking the lowest level since November 2021.
In Canada, the rig count has seen an increase, reaching 128, which is up by eight rigs from the previous week and 31 more than the same period last year. Internationally, the rig count rose to 978 in April 2024, reflecting an increase of seven rigs from the previous month and 31 more compared to April 2023.Overall, the North American rig activity indicates a mixed trend with the U.S. experiencing a decline, while Canada shows growth in rig counts. These figures serve as a crucial indicator for the oil and gas industry's health and future production capacities. For the strong demand of the guar gum the exploration of the oil and natural gas should be increased as comparison to current level.
Current Oil Drilling Activities
As of mid-2024, the global oil drilling landscape is marked by significant activity and varied developments across different regions. Notably, oil and gas producers have sanctioned and discovered considerable volumes of oil equivalent over the past year, with 20 new fields approved in 2023, amounting to 8 billion barrels of oil equivalent (boe). Projections suggest that by the end of the decade, nearly 31.2 billion boe across 64 additional fields will be sanctioned, despite concerns about climate goals.
In the Middle East, Kuwait is ramping up its drilling efforts, aiming to reach a production capacity of 4.0 million barrels per day (bpd) by 2040, while Oman continues to expand its drilling programs, with a significant increase in well contracts. Iran is also focusing on maintaining production levels by working over existing wells and initiating new drilling projects.
Namibia's oil sector is poised for a major breakthrough, transitioning from exploration to development after significant discoveries in 2022. Shell and TotalEnergies are leading the charge, with the potential for Namibia to become a major oil producer by the 2030s. In offshore drilling, the rig market is experiencing growth, especially in Southeast Asia, South America, and West Africa. Increased demand for rigs is driving higher utilization rates, with newbuilds and reactivations expected to meet the growing needs.
The latest status of global crude oil demand reveals a complex landscape influenced by production cuts, economic trends, and geopolitical factors. As of mid-2024, global oil demand is projected to increase modestly, with the International Energy Agency (IEA) forecasting a rise of 1.1 million barrels per day (mb/d) for the year. This is a slight downward revision from previous estimates due to weaker economic performance and lower-than-expected demand growth, especially in the first quarter of 2024. Guar gum will be require to increase the oil production from the current drilling facilities.
The US Energy Information Administration (EIA) anticipates global oil demand to reach 102.24 mb/d in 2024, slightly lowering its previous outlook by 90,000 barrels per day. This revision is influenced by OPEC+ production cuts, which are expected to tighten supply and support higher prices. The EIA forecasts Brent crude prices to average around $94.91 per barrel in 2024, reflecting the constrained supply and robust demand expectations.
Geopolitical factors and economic uncertainties continue to play significant roles in shaping the oil demand outlook. While demand in regions like Europe and the Middle East has shown declines, other areas, including the US and Asia, are seeing more stable consumption patterns. Overall, despite some fluctuations, the global oil market is poised for moderate demand growth amid tightening supplies.
Guar seed and guar gum prices remain stagnant in the local physical markets, with prices similar to those quoted on the National Commodity & Derivatives Exchange Ltd (NCDEX). The regular local demand is expected to continue supporting future trading of these commodities. High-quality guar seed is trading at Rs 5300 per 100 kg, while average quality is at Rs 5200 per 100 kg. Standard quality guar gum is priced at Rs 10400 per 100 kg. In interior regions, guar seed prices range between Rs 5000 and Rs 5200 per 100 kg.
On NCDEX, guar seed futures for June and July contracts are trading at Rs 5335 and Rs 5394, respectively, marking decline of 0.50% (Rs 27/100 kg) and 0.48% (Rs 26/100 kg) with open interests of 27690 and 32305. Guar gum futures for June and July are at Rs 10417 and Rs 10563, both declined by 0.67% (Rs 70/100 kg) and 0.69% (Rs 73/100 kg) with open interests of 19,720 and 31,290.
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