Exports of the PAN have been hit hardly due to crisis in the south east Asian region. A major player in Asia, China has virtually stopped all orders. But with few enquiries coming of late from China, the sentiment has improved.

Earlier China had increased its import duty, which literally snatched away the market from Indian players. Other south east Asian countries, on account of their proximity to the Chinese market are capitalising at India's expense. However, reports point out that commissioning of a plant in Taiwan will bring down international prices further.

Prices of phthalic anhydride fell sharply from $465 per tonne in January 1998 to $290 per tonne a month back. When prices touched a low of $290 per tonnes most of the plants cut down their capacity, which also helped in boosting the prices.

Industryexperts say that prices have bottomed out at the $290 level and it is likely to remain firm at the current level as supply seems to have matched demand after the production cuts. If China enters the market, prices are likely to improve further.

Sources say that the domestic market remains depressed as stockists are not picking up stocks which has further aggravated the crisis. Industry sources say that prices are likely to remain depressed in the domestic market as no surge in demand is expected in the near future. Apart from imports through the advance licence route there was hardly any material entering the country.However, domestic demand shows no signs of any improvement. To add to the problems of the industry, imports of plasticisers form neighbouring countries have increased.

Plasticisers industry is one of the major consumers of phthalic anhydride. As a result of cheap imports, 20,000 tonnes of plasticiser capacity which was supposed to be set up in the country did not take place.

Furthermore,the paint industry in India is not very bullish. There is a marginal growth of around 3-5 per cent as against a seven per cent growth last year. PAN is one of the main ingredients for manufacturing paints. A general slackness in demand for PAN in the domestic industry has also led stockists away from booking stocks. This coupled with the fact that the two major players in the industry Thirumalai Chemicals and IG Petro had expanded capacities had depressed prices further in the domestic market.

The only relieving fact for the phthalic anhydride industry is that the prices of its raw material ortho-xylene has also kept pace and has been falling.