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Sluggish demand from China drags down castor prices

Farmers, traders hold on to stock as small crushers struggle for raw material supply

Sluggish demand from China drags down castor prices
Prices of castor have fallen from as high as Rs 1,560 per 20 kg to below Rs 1,450 per 20 kg. Industry watchers say Chinese buyers have discontinued fresh orders on account of the surge in Covid-19 cases and lockdown in various cities

By NAYAN DAVE

In view of sluggish demand of castor oil from China, prices of castor have plummeted by Rs 100 per 20 kg in less than a month in the domestic market.

Prices of castor have fallen from as high as Rs 1,560 per 20 kg to below Rs 1,450 per 20 kg. Industry watchers say Chinese buyers have discontinued fresh orders on account of the surge in Covid-19 cases and lockdown in various cities

Mukesh Modi, a leading trader of castor in Gujarat said, “In many parts of China, Covid-19 lockdown is prevailing. As a result, castor oil demand has plummeted.”

With 40 % share in India’s total exports, China is the biggest consumer of castor oil from India. Chinese companies use castor oil for manufacturing of sebacic acid, a castor oil derivative and exports to Europe and the US.

“Most of the sebacic acid manufacturing units have either reduced production or shut operation in China due to the spread of Covid-19 cases,” said a Gujarat-based exporter of castor oil.

According to estimates, farmers and traders are holding a stock of nearly 0.7 million tonne of castor. Carry-forward stock of castor was less than 100,000 tonne in the current season compared to 2,50,000 tonne in the previous year.

“Absence of Chinese buyers in the market has disrupted calculation of farmers and traders who are still holding a large quantity of castor stock as they anticipated castor prices to shoot up beyond Rs 1,600 per 20 kg,” said an industry source. The prevailing situation has impacted smaller castor crushing units adversely as they are not able to get raw material supply consistently. There are nearly 25 castor crushing units in Gujarat. Of these, seven have shut down citing reasons of maintenance. Bigger units are still operational as they have adequate stock of castor purchased earlier this year.

Some of the big players in castor oil production are Adani Group, Wilmar International Ltd, NK Proteins, Jayant Agro-organics Limited, Ambuja Solvex, Girnar Industries and Gokul Agro. Data compiled by Solvent Extractors’ Association (SEA) reveals that compared to castor oil exports of 76,256 tonne in June 2021, this year hardly 54,564 tonne oil was exported from India in the same month.

Castor oil and its derivatives are used in many industries including air-conditioning, air-fuel, pharmaceutical, dyes & chemical, soap, paints, inks, plastic, perfumes, adhesive, paper, lubricants, food, rubber and others. The US and the European Countries are also importing castor oil from India. Apart from these markets, India also exports castor oil to Middle East and Latin American countries.

India is the largest producer of castor and castor oil in the world with almost 90% share of which Gujarat has a lion’s share of 80% in production of castor and castor oil. Apart from Gujarat and Rajasthan, Telangana and Andhra Pradesh are major producers of castor.

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