The situation is expected to persist over the next year also as the supply-demand mismatch is expected to be set right only by 2000. "The year ahead will be tougher than this year as tumbling global prices are yet to show a major recovery," says GL Lath, former chairman, Synthetic Rayon & Export Promotion Council.

Fall in the domestic prices was more or less in tandem with international prices which tumbled down to unexpected lows on the back of global recession and consequent drop in the purchase of fabrics. Global PTA prices sank to $330 per tonne in December 1998 from a higher level of $515 in 1996.

Reflecting the global trend, PTA prices, which hit a plateau of Rs 23,000 per tonne in January 1998 continued to remain at same level throughoutthe year except in June when it showed a marginal rise to Rs 24,600 per tonne.

The prices fell from a relatively higher level of Rs 28,500 per tonne in April 1997.

DMT prices nosedived to Rs 16,500 per tonne in December 1998 from Rs 24,000 per tonne in January. From a higher level of $1,600 in 1996, global DMT prices dropped to $325 by December. MEG prices fell to Rs 23,000 per tonne in December from Rs 30,000 per tonne in January 1998.

"Production of PTA and DMT in Asian countries have substantially gone up. In India, the trend is that of eroding demand. Though the global capacities have increased by 25 per cent, there has been only 20 per cent increase in the global demand," says Lath. Cyclical fall in prices had a negative effect on manufacturers with players like Indian Petrochemcial Corporation Ltd (IPCL) and Bombay Dyeing reporting worst-ever losses for the year ended 1997-98. However, Reliance Industries, which is the major producer of PTA, weathered the storm.

"Volume-driven strategy coupledwith ability to offset the decline in prices of paraxylene- raw material for PTA -- have pushed up RIL's bottomline," said industry sources. Global paraxylene prices have fallen to $376 tone in December from the January price of $266 tonne.

Though there has been conflicting claims on the industry upturn, there is a groundswell of support for the argument that the situation will turn for the better by beginning of next year.

Incidentally, synthetic fibre manufacturers could not cash in on the bottoming out in PTA and DMT prices as there has not been any corresponding increase in fibre prices.

"When raw material prices are falling, there will definitely be a decline in the fibre price. The problem has been compounded by the fact that there has been a more than corresponding decrease in fibre prices," said SA Raja, senior manager, commercial, Raymond Synthetics. PFY prices have declined to Rs 75,000 per tonne in December from Rs 90,000 per tonne in January.

Polyester fibre industry is also not free fromthe problem of overcapacity as excess capacities have led to a total shakeout in the industry with most of the smaller players moving towards extinction.

World over, the consumer expenditure on textile is declining and the consumption of man-made fibres is growing slowly. Recession has actually sparked off a restructuring in the global polyester industry leading to buyouts and mergers. Collin Purvis, president, European man-made fibres association, who has currently been to India, sums up the future situation by saying that it all depends on how fast the world polyester Industry can escape from the recession.