Polypro IndoPak Guar Gum Market Report – September 20, 2017

The IndoPak guar crops are progressing nicely. Pricing is more or less stable and following the short term weather / demand clues.

The favorable crop forecast for western Rajasthan should compensate for the mid-season flooding that damaged some areas. The initial new crop guesstimates are in the range of 8-10 million bags of seed from India with most leaning on the high side. The carryover from past seasons is reported at the equivalent of 9-13 million bags (most in the 9-11 range).

For 2016 the worldwide export demand from India was 12 million bags or 300,000 metric tons of powder. It appears that 2017 demand could reach 17 million bags (425,000 metric tons powder equivalent) based on the first 6 months of export statistics. Seed to powder yield of 25%. The increase is largely USA demand from O&G. The attached graph shows all USA imports by month against the Baker Hughes rig counts. Generally, non O&G applications are less than 5,000 metric tons per month in the USA. 2015-2107 Guar Imports USA/India Graph

O&G is forecasted to remain strong in 2018. The U.S. Energy Information Administration (EIA) forecasts “overall U.S. crude oil production will continue to grow in the coming months. EIA forecasts total U.S. crude oil production to average 9.3 million barrels per day for all of 2017 and 9.8 million b/d in 2018 which would mark the highest annual average production in U.S. history, surpassing the previous record of 9.6 million b/d set in 1970.  U.S. dry natural gas production is forecast to average 73.7 billion cubic feet per day (Bcf/d) in 2017, a 1.4 Bcf/d increase from the 2016 level. Natural gas production in 2018 is forecast to be 4.4 Bcf/d higher than the 2017 level.” Full September 2017 report can be found at https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf

The supply ranges from 17-23 million bags with the consensus in the 17-19 million bag range.  India reported slow O&G business for the last couple of months and as a result forecasted demand for 2017/2018 could fall somewhere in the 14-17 million bag range.  Better crop numbers will be available in October after the physical field surveys. Likewise, in December we will have three more months of O&G data to better forecast 2018.

Please balance our comments with others.