In India, while there were five companies making phthalic anhydride three years ago, only two remain - Ganesh Anhydrides and Thirumalai Chemicals. Despite a more optimistic outlook for PAN in the current year, a sustained Asian demand for polymers remains a question mark. Analysts feel that it would take at least a couple of years for the Asian markets to restructure and revive after the severe downturn in the last two years. The bad years have taken severe toll of IG Petro and Mysore Petro in India, both of whom booked huge losses, while Thirumalai Chemicals' sales dipped badly in PAN. Overseas in Asia thePAN units to close down are Indonesian plant Petrovidhadha (capacity 70,000 tonnes), Dove Chemicals of Singapore (30,000 tonnes), Eternal Petrochemicals of Thailand (30,000 tonnes), Nippon Shokubai of Japan (40,000 tonnes) and a Kohap Chemicals, a Korean plant having 70,000 tonnes went bust even before commissioning.

While the global demand approximately is 4 million tonnes, the years 1997 and 1998 saw huge increase of capacities which include IG Petro, Thirumalai Chemicals (both currently have 1.2 lakh tonnes) within the country and Kohap and Nanya in the Asian region. With the demand supply balancing out more on account of the closures mentioned, PAN is moving up in the domestic market from Rs 23,000 per tonne in the beginning of last fiscal to Rs 32,000 - Rs 34,000 levels currently.

The export prices remain unencouraging. Last year PAN was being dumped for prices as low as Rs 10,000 /tonne to Rs 15,000 /tonne on occasions.The cost of production averages around Rs 17,000 tonnes. Despite current pricesbeing closer to $700 per tonne, EoUs in the country still do not have a bright outlook in the near future as over-capacities still prevail and restructuring in Asia would take more time.

The undercutting was so rampant, that all the companies which indulged in it went bust, according to industry analysts. Over here, IG Petro paid the highest price. Being an EoU it could not sell in the local market and it had to compete with the S Asian dumping, incurring a net loss of Rs 68 crore on a sales of Rs 103 crore last year.

For the first quarter it registered a net loss of Rs 16.04 crore. Mysore Petro Chemicals Limited which has local sales, made a net loss of Rs 17.50 crore last year on a sales of Rs 34.36 crore. For the first quarter on a net sales of Rs 8.05 crore, the company registered a net loss of Rs 4.7 crore.Analysts opine that it would be difficult for the two companies to revive despite PAN prices looking up. The margins on PAN would be inadequate for the companies to pull through. It is learnt thatIG Petro was put on the block some months earlier, but that there are no takers.

For companies like Thirumalai Chemicals, the outlook has improved. The company had sustained itself last year, though with post tax profits halved to Rs 5.99 crore (Rs 11.32 crore) on higher sales of Rs 161 crore (Rs 144.6 crore).

For the first quarter Thirumalai has sold 20,000 tonnes of PAN, 50 per cent of total PAN sales for last year. This year it hopes to touch 65,000 tonnes (total capacity 1.2 lakh tonnes).

Another reason for it to cheer is that the raw material orthoxylene prices which moved up in tandem with PAN, has tightened. By September orthoxylene price is likely to fall further after Reliance commissions its plant, leading again to a situation of excess supply.