By: Sowmya Saranathan -- Research Analyst, Crops and Fibers
21 February, 2018
The sudden surge in the oil and gas market in 2011, resulting from the exploration of shale gas, spiked the guar gum market since it is an integral component of the fracking fluid that is used for enhancing the oil recovery. However, oil production fell significantly by 28.5 percent from 2013 to 2014 mostly due to the crash of the crude oil market. This led to a decline in gas and oil exploration and thereby impacted the import demand for guar gum from India. Weaker export demand and the stock burden were responsible for the debilitation of the guar gum market, leading to the closure of 70 percent of its processing units in India. However, after two years of down cycle in the shale gas industry, explorations were projected to increase in 2017, owing to the Energy and Oil Policy of the new US government. Therefore, the industry anticipated a mild recovery in 2017, which led to the recapitulation of oil well drilling activities. By the time the market for guar gum revives to meet the demand from the oil sector, it is expected that xanthan gum, which is the best sustainable substitute, would replace guar gum transiently.
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