At present MEK is quoted at $680 per tonne at international levels, but itis being quoted at $580 per tonne, especially for Indian users. This is less$100, as compared to the international prices. Domestic prices however, arerather sluggish and at present are quoted at Rs 39 to Rs 44 per kg (plusduty and taxes), down from Rs 50 in December 1999.

At the international front, MEK is registering a steady rise in prices. Theproducers are bullish about strong performance of price and also due to thechemical plant in The Netherlands, which is one of the major producers ofMEK in the world, would be temporarily shutdown for maintenance in March2000.

Traders said that certain top importers in the country have made specialarrangements with the agents of a leading USA-based internationalmanufacturer of this chemical to supply it at cheaper rates compared to theinternational prices. Due to the sluggishness in Korean markets, the demandof MEK and that of other chemicals fell and the traders in the country areat present not in a position to pay for advance stock-booking, saidsources.

So, sensing a better opportunity in the Indian sub-continent most of thecurrent shipments are being diverted to the country. Accordingly, importedMEK is at present available at around 15-20 per cent less than that of thelocal product, forcing domestic companies to lower their selling price byequal margins.

In the domestic market, there are only two manufacturers:- Baroda-basedGujarat Carbon and South-based C-Tex Petro Ltd. Total domestic consumptionof MEK is around 10,000 mt/pa and the domestic manufacturing capacity isaround 7,500 mt/pa.

Interestingly, there are a few foreign companies playing the game to churnthe domestic market. At present, more than 800-tonne of MEK is likely tocome from South Africa and the US before mid-March. Further, the oversupplyof MEK, will push-down the chemical's price in the domestic market, saidtraders.

It is obvious, traders say, if the international price is cheaper why shouldwe purchase it from the domestic manufacturers? If there is reduction incustoms duty, more imports of cheap MEK will flood local markets.In Mumbai chemical markets, there is a strong rumour that the customs dutywould be reduced by 5 per cent and that of the excise duty by 6 per cent inthe budget. Large number of traders are shifting their attention fromchemical markets to exciting share markets for quicker gains. Coupled withthe direct selling approach adopted by the foreign companies, the situationis likely to hit smaller players hard.