Prices of solvents like isopropyl alcohol (IPA), fell from Rs 41.50 per kg in September 1997 to the current level of Rs 34.50. Methanol is down from Rs 12.50 a kg to Rs 8.25 per kg in the same period. Ethylene di-chloride has slipped from Rs 27 per kg to Rs 14 per kg.

Traders site increase in imports coupled with low prices of its basic raw material -- crude oil as the main reasons for the drop in prices.

Further, depreciation in currencies in the south east Asian economies has either increased the imports.

One of the most widely used solvents by the pharmaceutical industry, methylene di-chloride (MDC) is currently being traded at Rs 39.50 per kg. This is far cry from the prevrious year's price of Rs 47 per kg. Imports of MDC have also increased by over 20 per cent, industry sources say.

As a result of lower solvent prices, bulk drugs prices have declined. Prices of amipicillin trihydratehave fallen to the current level of Rs 1900 per kg from Rs 2700 per kg prevalent at the same time in 1997. Also, prices of dyes and dye intermediates have fallen by 15 per cent to 20 per cent over the last year on account of the drop in prices of solvent.

With most of the Asian economies in trouble, solvents which were produced by in the middle east are now being sold in India, as these countries have an undeveloped down stream industry like the dyes, pharmaceutical or fine chemicals industry.

Further, with the Russian rouble also depreciating, solvents meant for these markets are also likely to find their way into the country. Already, traders say manufacturers are faced with inventory problems and are now offering attractive payment terms to the customers.

Inspite of the current rise in crude oil prices, those of solvents have not increased. Industry sources say that there is normally a time lag of two to three months. However, some say that lack of demand for solvents will discourage manufacturerfrom increasing the prices, which in turn will affect their margins.

As a result of this some of the smaller units will be forced to close down their plants, only then will there be an equilibrium in supply and demand. Some of the solvents that remained largely unaffected are hexane, which was trading at Rs 16 per kg in September 1997, while it is currently around Rs 16.50 per kg. Acetone too has remained firm at Rs 32 per kg levels, while benzene, after a drop in the interim, has increased from previous year's level of Rs 15 per kg to Rs 16 per kg.

Diacetone has increased from Rs 59 per kg to Rs 61.50 per kg, while formic acid has gone up from Rs 37.50 per kg to Rs 38 per kg on account of increased exports.