This at a time, leading importers and traders of chemicals say, when the number of indenting enquiries to import chemicals has not been very encouraging. More so, when the Indian rupee is depreciating against the US dollar by the day (making imports costlier) and when the overall domestic economic conditions do not seem to be encouraging in the near future, what with deteriorating political conditions.

On the other hand, in order to compete with the local suppliers and hopefully jump the recently raised import duty barrier, some of the foreign suppliers (including traders) have reacted sharply by reducing their prices. Butthe depreciating rupee and strengthening US dollar do not offer much benefit to the importers.

Under such circumstances, some of the leading local manufacturers of acetic acid, acetone, mythelene, isopropenol, toulene, titanium dioxide, methanol, phenol, caustic soda among others are said to have not only increased their prices by around 15-20 per cent in the local markets but even the discounts offered earlier are withdrawn, and most of which are currently commanding premiums.

A sample of recent developments:

Acetone prices have been jacked up by Rs 1,500 per tonne to Rs 26,500 per tonne. Withdrawing the small dose of discounts offered to the buyers earlier, the manufacturers have even introduced strict rationing, resulting in ``hand to mouth'' situation for the needy buyers.

Manufacturers of methanol have raised their prices to over Rs 9,000 per tonne from earlier Rs 8,500 (plus discount) earlier. The product is said to be commanding a premium of Rs 13-15 per kg.

Phenol prices have been raised toover Rs 2,500 per tonne from earlier Rs 2000. There is a premium of Rs 2-3 per kg.

Caustic soda prices have jumped by around Rs 100 per bag of 50 kg, resulting in a premium of Rs 2-3 per kg. This is said to be because of shortage of chlorine in the market.

Toulene prices have been jacked by around Rs 5 per kg to Rs 14 per kg. Till May this year, the prices were dropping, and the product was available at a discount. Even mid-xylene prices too were raised by Rs 4 per kg to Rs 17 per kg.

In order to make their products more attractive in the local market protected with renewed import duty wall, foreign suppliers have reacted sharply. For example, butynol prices have tumbled down to around $430-420 per tonne from a high of $650 in the first quarter of 1998; isopropenol prices have declined to around $420 from $620 earlier; acetic acid is said to be down to around $350-370 per tonne from over $500 per tonne earlier; butyl acetate prices are expected to pierce the $400 per tonne mark soon from its peak ofover $640 per tonne earlier.

In the local markets, three developments are said to have prompted the chemical manufacturers behave the way they have over the last one month.One, the protective wall in the form of higher import duty of eight per cent announced in the 1998-99 budget on June 1. This was later halved to four per cent. Soon after the budget announcement, there was an allround confusion among the manufacturers as to the impact of this duty protection. But the manufacturers were fast enough to raise (ad hoc) prices for their products.

Two, even when these manufactures were still calculating the benefits resulting out of this duty protection, there was another development, grim though. The cyclone hit the Kandla and other port regions of Gujarat, where large stocks of chemicals were said to have been stored, both by local manufacturers and importers. Thousands of tonnes of chemicals are stored at Kandal and other adjoining ports.

Said a leading trader: "After the cyclone, no one was too sureabout the quantity or the quality of the products available. This led to instant jump in prices by the traders, brokers and even manufacturers." The resultant shortage saw manufacturers raise their prices, while the traders and brokers added premiums to the raised prices.

Three, temporary or forced (short term) closure of plants of some of the manufacturers like Rashtriya Chemical Fertilisers, Hindustan Organic Chemicals, Deepak Fertilisers, Gujarat Narmada among others.

All this is said to have created an upward pressure on the prices in the domestic chemical markets, more so for the solvents, traders said."The local chemical makers are making good the losses suffered last year," said SK Tapuriah, one of the leading importers of chemicals.

According to Tapuriah, like any other Indian manufacturer, the chemical manufacturers too have been crying for duty protection. They got the protection, but will be unable to continue for long in a protected environment, especially because global majors are all vyingthe Indian markets.

"Majority of the global chemical suppliers are keen to supply their products in the Indian market. Under such circumstances, only the fittest will survive," Tapuriah maintains.

Given the ongoing developments in the south east Asian markets, foreign chemical suppliers are eying the vast Indian market. Exxon, Shell, Celenese, Winmar, Eastman, among others have little choice but to target their products to India. It remains to be seen how long the domestic makers continue to enjoy the fruits of increased prices.