Conditions continue to favor the buyer. It appears the IndoPak guar market will have little leverage to significantly increase price for long periods of time given the outlook for abundant raw material supply, excess frac gum manufacturing capacity and poor USA O&G frac demand. However, it should be noted that frac gum plants continue to shut down and the amount of “excess” capacity is shrinking.
We have reviewed US guar imports for 4Q2015. There was 30,000 mts of guar imported for all applications. Of that, 25,000 mts (8,333 mts per month) can be reasonably isolated to the O&G frac application. As you may recall, O&G frac imports averaged during the boom closer to 25,000 mts per month. There is talk in the industry about re fracking old wells which might offset some of the lower guar usage due to the predicted rig count decline in 2016.
Please balance our opinions and comments with others.