editor's picks exporter vikas takes a hit us firms cut...
TRANSCRIPT
632015 US firms cut fracking investments guar gum exporter Vikas takes a hit shy Livemint
httpwwwlivemintcomIndustryVHlx25aPY23o6iMEXh9nXJUSshyfirmsshycutshyfrackingshyinvestmentsshyguarshygumshyexportershyVikasshythtml 15
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New Delhi A big bet on the US fracking boom is coming back to hauntIndiarsquos guar industry
Orders for guar gummdashused to extract shale oil and gasmdashare drying up asUS companies cut investments following the plunge in crude oil prices ForVikas WSP Ltd Indiarsquos secondshylargest exporter thatrsquos meant idling 40 ofits 140000 metric ton capacity a sign of industry stress
ldquoItrsquos going to be very difficult for the guar industry to survive the currentcrisisrdquo Vikasrsquo MD BD Agarwal based in Rajasthan said in a phoneinterview on 28 January ldquoThe situation is very bad We neither havecontrol over it nor can we predict whatrsquos in storerdquo
Demand for guar gum has roughly halved forcing some factories innorthern India to shut Agarwal said The industryrsquos woes in India are justone of the ripples spreading through the global economy from crudersquos dropto a sixshyyear low a slide thatrsquos helped haven assets such as US Treasuries
FIRST PUBLISHED TUE FEB 10 2015 08 20 PM ISTHOME raquo INDUSTRY
US firms cut fracking investments guar gumexporter Vikas takes a hitIndiarsquos second largest exporter of guar gum is idling 40 of its capacity and sees bleak futureaheadPrabhudatta Mishra
TUE MAR 03 2015 05 17 PM
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06 MARCH 2015
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632015 US firms cut fracking investments guar gum exporter Vikas takes a hit shy Livemint
httpwwwlivemintcomIndustryVHlx25aPY23o6iMEXh9nXJUSshyfirmsshycutshyfrackingshyinvestmentsshyguarshygumshyexportershyVikasshythtml 25
Narendra Modi taps publicin battle over a new landlaw
while hurting the currencies of oil exporters such as Russia
India is the worldrsquos largest producer and supplier of guar gum which isused to blend materials in hydraulic fracturing to unlock oil and gas fromshale formations A fracking boom in recent years set the stage for the glutthatrsquos contributed to crudersquos 48 slide in the past year
lsquoNo Demandrsquo
Vikas invested in two new factories in 2012 and is now depending more onsales to the food industry
The company was one of many Indian producers that expanded capacity in2012 and 2013 after demand surged from users including Halliburton Cothe worldrsquos largest provider of hydraulicshyfracturing services said GirdharilalSarda president of the Guar Gum Manufacturers Association of India
ldquoWhen there is no demand we have to cut our productionrdquo Sarda said byphone in Mumbai on 6 February ldquoNow it seems a mistake to haveexpanded capacity though at that time it made a lot of sense Before oneyear no one was predicting crude prices to reach this levelrdquo
US crude production has jumped almost 70 in the past five years addingalmost 4 million barrels a day to global supply and that has affected pricesWest Texas Intermediate the US benchmark crude fell from $107 a barrelin June to less than $45 last month More than 30000 layoffs have beenannounced across the industry as companies reduce budgets according toa tally by Bloomberg News
Price Crash
The drop accelerated when the Organization of Petroleum ExportingCountries (Opec) whose members control about 40 of global oilproduction voted in November to maintain output in an effort to protect itsmarket share
ldquoWe have seen buyers of all sorts of consumables like guar putting newpurchases on hold over the last couple of months as they try tounderstand how the oil price fall is going to play out through the supplychain over the next six monthsrdquo Alexander Robart a partner at Houstonshybased PacWest Consulting Partners Ltd said in an eshymail ldquoPurchases willresume eventually but at a lower level to support the lsquonew normalrsquo activitylevelsrdquo
Prices of guar gum extracted from the seeds of a leguminous plant grownin India Pakistan and the US have crashed to about Rs9240 ($149) per100 kilograms in Mumbai from a record Rs95920 in 2012 data from theNational Commodity amp Derivatives Exchange show
Futures for delivery in March tumbled as much as 56 to Rs9060 per 100kilograms on Tuesday the lowest level for the mostshyactive contract sinceMay 2011 Trading in the commodity was banned in March 2012 afterprices jumped ninefold about in four years before resuming in May 2013
lsquoJust Survivingrsquo
India accounts for more than 70 of the global guar seed productionwhich is also an ingredient in food emulsifiers additives and thickenersaccording to the Multi Commodity Exchange of India Ltd Farmers inRajasthan produce 70 of the nationrsquos crop
With exports dwindling and production cut Vikas expects sales to dropbelow Rs1000 crore rupees in the year ending March from Rs1040 crorerupees a year earlier Agarwal said Profit margins are falling and thecompany is ldquojust survivingrdquo he said Shares of Vikas which rose 13 in2014 have retreated 29 this year to Rs1354 compared with 31 gain forthe benchmark SampP BSE Sensex index
Exports of guar gum may fall to about 550000 tonnes in the year through
MON MAR 02 2015 02 11 PM
Shooting of Kremlin criticBoris Nemtsov triggers antishyPutin protestsSAT FEB 28 2015 02 06 PM
A budget a briefcase andexpectations Financeministers on budget dayTHU FEB 26 2015 04 52 PM
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632015 US firms cut fracking investments guar gum exporter Vikas takes a hit shy Livemint
httpwwwlivemintcomIndustryVHlx25aPY23o6iMEXh9nXJUSshyfirmsshycutshyfrackingshyinvestmentsshyguarshygumshyexportershyVikasshythtml 35
March from 601945 tonnes a year earlier Sarda said Shipments totalled385400 tonnes valued at $956 million in the six months ended Septemberaccording to stateshyrun Agricultural and Processed Food Products ExportDevelopment Authority data
The slump in prices and demand may prompt farmers to switch from guarto cotton and lentils next year Sarda said The crop is planted from Julyand harvested from October
ldquoTough times lie ahead for guar producersrdquo Robart said ldquoThe massiveoversupply and overcapacity in guar production facilities by a range ofIndian market participants is going to leave a lot of guar producers in verytough financial positions and we will likely see bankruptcies that helpfacilitate consolidationrdquo Bloomberg
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Subscribe to Daily Newsletter Breaking News
FRACKING SHALE OIL VIKAS GUAR GUM CRUDE OIL
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17 Red Carpet Dresses That Will Make You Cringe
15 Most Beautiful Women in the World
MORE FROM THE WEBThe Dress That Broke The Internet (CNBC)
Schluss mit Haarausfall dank eines 100 natuumlrlichen Kraumluterserhellip (FulFix Hair Serum)
15 Richest Women in the World (ThrivingLifestyle)
Groszligbritanniens (Visit Britain)
17 Red Carpet Dresses That Will MakeYou Cringe (Celebrity Revolt)
15 Most Beautiful Women in the World (RaveBin)
An Easy Trick To Naturally Get YourVision Back (Vision Protocol Guide)
Probably The MOST Beautiful House inThe World (3DshyPrint Today)
10 Weird Things Men Find Attractive ina Woman (Amerikanki)
632015 US firms cut fracking investments guar gum exporter Vikas takes a hit shy Livemint
httpwwwlivemintcomIndustryVHlx25aPY23o6iMEXh9nXJUSshyfirmsshycutshyfrackingshyinvestmentsshyguarshygumshyexportershyVikasshythtml 25
Narendra Modi taps publicin battle over a new landlaw
while hurting the currencies of oil exporters such as Russia
India is the worldrsquos largest producer and supplier of guar gum which isused to blend materials in hydraulic fracturing to unlock oil and gas fromshale formations A fracking boom in recent years set the stage for the glutthatrsquos contributed to crudersquos 48 slide in the past year
lsquoNo Demandrsquo
Vikas invested in two new factories in 2012 and is now depending more onsales to the food industry
The company was one of many Indian producers that expanded capacity in2012 and 2013 after demand surged from users including Halliburton Cothe worldrsquos largest provider of hydraulicshyfracturing services said GirdharilalSarda president of the Guar Gum Manufacturers Association of India
ldquoWhen there is no demand we have to cut our productionrdquo Sarda said byphone in Mumbai on 6 February ldquoNow it seems a mistake to haveexpanded capacity though at that time it made a lot of sense Before oneyear no one was predicting crude prices to reach this levelrdquo
US crude production has jumped almost 70 in the past five years addingalmost 4 million barrels a day to global supply and that has affected pricesWest Texas Intermediate the US benchmark crude fell from $107 a barrelin June to less than $45 last month More than 30000 layoffs have beenannounced across the industry as companies reduce budgets according toa tally by Bloomberg News
Price Crash
The drop accelerated when the Organization of Petroleum ExportingCountries (Opec) whose members control about 40 of global oilproduction voted in November to maintain output in an effort to protect itsmarket share
ldquoWe have seen buyers of all sorts of consumables like guar putting newpurchases on hold over the last couple of months as they try tounderstand how the oil price fall is going to play out through the supplychain over the next six monthsrdquo Alexander Robart a partner at Houstonshybased PacWest Consulting Partners Ltd said in an eshymail ldquoPurchases willresume eventually but at a lower level to support the lsquonew normalrsquo activitylevelsrdquo
Prices of guar gum extracted from the seeds of a leguminous plant grownin India Pakistan and the US have crashed to about Rs9240 ($149) per100 kilograms in Mumbai from a record Rs95920 in 2012 data from theNational Commodity amp Derivatives Exchange show
Futures for delivery in March tumbled as much as 56 to Rs9060 per 100kilograms on Tuesday the lowest level for the mostshyactive contract sinceMay 2011 Trading in the commodity was banned in March 2012 afterprices jumped ninefold about in four years before resuming in May 2013
lsquoJust Survivingrsquo
India accounts for more than 70 of the global guar seed productionwhich is also an ingredient in food emulsifiers additives and thickenersaccording to the Multi Commodity Exchange of India Ltd Farmers inRajasthan produce 70 of the nationrsquos crop
With exports dwindling and production cut Vikas expects sales to dropbelow Rs1000 crore rupees in the year ending March from Rs1040 crorerupees a year earlier Agarwal said Profit margins are falling and thecompany is ldquojust survivingrdquo he said Shares of Vikas which rose 13 in2014 have retreated 29 this year to Rs1354 compared with 31 gain forthe benchmark SampP BSE Sensex index
Exports of guar gum may fall to about 550000 tonnes in the year through
MON MAR 02 2015 02 11 PM
Shooting of Kremlin criticBoris Nemtsov triggers antishyPutin protestsSAT FEB 28 2015 02 06 PM
A budget a briefcase andexpectations Financeministers on budget dayTHU FEB 26 2015 04 52 PM
Afghanistan create history inDunedin edge Scotland infirstshyever World Cup win
MORE FROM THIS SECTION
ALSO READ
Opening Bell 11 February | Asianmarkets subdued on Greeceuncertainty
close
632015 US firms cut fracking investments guar gum exporter Vikas takes a hit shy Livemint
httpwwwlivemintcomIndustryVHlx25aPY23o6iMEXh9nXJUSshyfirmsshycutshyfrackingshyinvestmentsshyguarshygumshyexportershyVikasshythtml 35
March from 601945 tonnes a year earlier Sarda said Shipments totalled385400 tonnes valued at $956 million in the six months ended Septemberaccording to stateshyrun Agricultural and Processed Food Products ExportDevelopment Authority data
The slump in prices and demand may prompt farmers to switch from guarto cotton and lentils next year Sarda said The crop is planted from Julyand harvested from October
ldquoTough times lie ahead for guar producersrdquo Robart said ldquoThe massiveoversupply and overcapacity in guar production facilities by a range ofIndian market participants is going to leave a lot of guar producers in verytough financial positions and we will likely see bankruptcies that helpfacilitate consolidationrdquo Bloomberg
Tweet
11 1 0
Comments
Subscribe to Daily Newsletter Breaking News
FRACKING SHALE OIL VIKAS GUAR GUM CRUDE OIL
2
Share
6
Share
FROM THE WEB by TaboolaSponsored Links
CNBC
FulFix Hair Serum
ThrivingLifestyle
Visit Britain
Celebrity Revolt
RaveBin
The Dress That Broke The Internet
Schluss mit Haarausfall dank eines 100 natuumlrlichen Kraumluterserums
15 Richest Women in the World
Groszligbritanniens
17 Red Carpet Dresses That Will Make You Cringe
15 Most Beautiful Women in the World
MORE FROM THE WEBThe Dress That Broke The Internet (CNBC)
Schluss mit Haarausfall dank eines 100 natuumlrlichen Kraumluterserhellip (FulFix Hair Serum)
15 Richest Women in the World (ThrivingLifestyle)
Groszligbritanniens (Visit Britain)
17 Red Carpet Dresses That Will MakeYou Cringe (Celebrity Revolt)
15 Most Beautiful Women in the World (RaveBin)
An Easy Trick To Naturally Get YourVision Back (Vision Protocol Guide)
Probably The MOST Beautiful House inThe World (3DshyPrint Today)
10 Weird Things Men Find Attractive ina Woman (Amerikanki)
632015 US firms cut fracking investments guar gum exporter Vikas takes a hit shy Livemint
httpwwwlivemintcomIndustryVHlx25aPY23o6iMEXh9nXJUSshyfirmsshycutshyfrackingshyinvestmentsshyguarshygumshyexportershyVikasshythtml 35
March from 601945 tonnes a year earlier Sarda said Shipments totalled385400 tonnes valued at $956 million in the six months ended Septemberaccording to stateshyrun Agricultural and Processed Food Products ExportDevelopment Authority data
The slump in prices and demand may prompt farmers to switch from guarto cotton and lentils next year Sarda said The crop is planted from Julyand harvested from October
ldquoTough times lie ahead for guar producersrdquo Robart said ldquoThe massiveoversupply and overcapacity in guar production facilities by a range ofIndian market participants is going to leave a lot of guar producers in verytough financial positions and we will likely see bankruptcies that helpfacilitate consolidationrdquo Bloomberg
Tweet
11 1 0
Comments
Subscribe to Daily Newsletter Breaking News
FRACKING SHALE OIL VIKAS GUAR GUM CRUDE OIL
2
Share
6
Share
FROM THE WEB by TaboolaSponsored Links
CNBC
FulFix Hair Serum
ThrivingLifestyle
Visit Britain
Celebrity Revolt
RaveBin
The Dress That Broke The Internet
Schluss mit Haarausfall dank eines 100 natuumlrlichen Kraumluterserums
15 Richest Women in the World
Groszligbritanniens
17 Red Carpet Dresses That Will Make You Cringe
15 Most Beautiful Women in the World
MORE FROM THE WEBThe Dress That Broke The Internet (CNBC)
Schluss mit Haarausfall dank eines 100 natuumlrlichen Kraumluterserhellip (FulFix Hair Serum)
15 Richest Women in the World (ThrivingLifestyle)
Groszligbritanniens (Visit Britain)
17 Red Carpet Dresses That Will MakeYou Cringe (Celebrity Revolt)
15 Most Beautiful Women in the World (RaveBin)
An Easy Trick To Naturally Get YourVision Back (Vision Protocol Guide)
Probably The MOST Beautiful House inThe World (3DshyPrint Today)
10 Weird Things Men Find Attractive ina Woman (Amerikanki)