Hydrocolloids Global Market Outlook

  • Global supply of hydrocolloids has been rising at a CAGR of 5.80 percent over a period of five years. Asia Pacific and the US are the major producers and consumers of hydrocolloids
  • Food industry, pharmaceutical and personal care use the three months fixed price contracts 
  • Currently, the oil and gas industry holds a significant share by volume, by entering into a contract period of anywhere between one to twelve months based on the demand for oil 
  • Other small buyers prefer spot buying

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  • The contract period for guar gum procurement by the food industry varies from 3-6 months 
  • Going by the contract periods provided in the below chart, a cost saving of 3-5 percent can be achieved when compared to spot buying. Since the prices are expected to be on a continuous dip after February 2017, spot buying is the most preferable

Global Supply-Demand Analysis

  • The hydrocolloid supply is expected to increase by 2.3 percent in 2017 compared to the previous year
  • With an increased supply and reduced demand due to the stock burden, the prices of hydrocolloids may witness a drop in 2017
  •  Corn starch leads the hydrocolloids market segment, followed by guar gum due to the steep demand from the oil and gas industry and the food sector 
  • The use of xanthan gum and carrageenan in the food and beverage industry has been in demand owing to the increasing health consciousness among the consumers and multi-functionality of hydrocolloids. Other hydrocolloids such as alginates, agar and CMC hold a minor share

Global Supply –Guar Gum

  • The oil and gas industry has a significant influence on the guar gum market, since it is used as drilling aids in order to maintain viscosity and reduce friction during oil well fracturing and stimulation process
  • India is the leading producer of guar seed and exporter of guar gum in the world, accounting for about 80-85 percent of global guar seed and gum production, followed by Pakistan (10-12 percent) T 
  • Global production of guar gum spiked during the shale gas boom period. However, production fell significantly by 28.5 percent from 2013 to 2014 mostly due to the crash of the crude oil market, leading to the lower gas and oil exploration, thereby impacting the import demand for guar gum 
  • However, the outlook for guar in the long term is viewed to be optimistic, based mainly on the large and sustained demand for guar gum particularly in North America created by the shale revolution and the exploration of new oil reserves in China
     

 Global Demand by Application –Guar Gum

  • Guar gum demand shot up from 2012 to 2014 in the oil and gas industry, this lead to other end use industries like food, textile, paper printing to replace guar gum with the other thickeners.
  • Food grade gum, which accounted for 50 percent of the usage between 2008-2012, came down to a mere 18 percent in 2016 as food manufacturers shifted to alternative sources such as Carboxymethyl Cellulose (CMC) and Xanthan gum 
  • The consumption of guar gum in the oil and gas industry  increased as guar, being a natural thickener and easily bio- degradable, has a higher preference compared to other synthetic gums