Guar gum buyers aren’t buying, sellers aren’t selling: Industry expert

Guar gum prices have dropped a long way from peaks of $20 to $25 a kilo – but there is now a standoff between buyers and sellers, according to hydrocolloids industry expert Dennis Seisun.

Seisun, who is founder of IMR International and publisher of The Quarterly Review of Hydrocolloids, has been following the guar gum situation closely, and recently travelled to India to find information on the market there, which accounts for 80-85% of the world’s supply.

“Buyers are not buying and sellers are not selling,” he wrote in his monthly industry update. “Since June of this year, orders for fast hydrating guar (FHG) have dried up.”

Calling it “a game of Russian Roulette”, Seisun said guar seed suppliers are generally holding on for better prices, as prices paid for seeds at auction remain much lower than they have been – about $1.50 a kilo at one auction in Rajasthan last week, with a guar gum yield of about 30%.

Prices for the ingredient started to skyrocket in 2010 when demand spiked from the oilfield industry, which uses guar gum in its fracking process, causing price problems for the food industry.

A recent price estimate from IMR International put guar prices at around $7-8 per kg, nearly half the March level.

Earlier this year, Seisun speculated that guar gum prices were likely to be above $10 a kilogram by the end of the year.

“For now, it seems IMR will be losing several friendly bets made earlier this year, that guar prices would be above $10.00/kg by December 31, 2012,” he wrote in his latest update. “Still, that date is 5 weeks away and much can happen in the volatile guar market.”