In fact soda ash prices have declined substantially from those prevailing in the previous years. Traders say that prices have fallen mainly on account of lower demand as well as higher imports from Romania and China.

Imported material from China is being traded at around Rs 825-850 per 75 kg, while that from Romania is quoted between Rs 725-750 per 75 kg.Traders say that prices are unlikely to improve in the near future and on the other hand it is likely to drop further as imports could increase.

Further there are new capacities and expansions taking place, which industry sources say could result in some of the smaller and medium sized unit becoming unviable.

Capacity utilisation of soda ash manufacturers has also come down as a result of lower demand say industry sources. Production of soda ash has fallen from an average of150,000 tonnes per month to 110,000 tonnes per month. The worse affected have been the smaller to medium size players as their cost of manufacturing is currently higher than the market price.

Traders say that the industry is also riddled with high inventory. Traders say that the industry is having an inventory pile up of 45 days as against an average of 15 days.

Stock pile up has increased from 11,000 tonnes at the end of 1996-97 to 62,000 tonnes in the beginning of the current fiscal, this has further deteriorated in the first half of current fiscal.

To add to the problems of the industry is the high prices of salt, which is the main raw material for manufacture of soda ash.

The recent cyclone in Gujarat, which accounts for nearly 70 per cent of the country's production, has reportedly caused havoc in its prices. Prices of salt which normally ruled at around Rs 400 per tonne had increased to Rs 1,800 per tonne. Manufacturers of soda ash were unable to pass on the higher prices of their rawmaterial. Companies having their own salt pans too were affected.

Further prices of the two other inputs, power (which accounts for one-third of the input cost) and water has also been increased many folds.Apart from the problems of supply and demand and higher input costs, industry sources say the long term problem of the soda ash industry is that of its location. Most of the major manufacturers like Tata Chemicals, DCW, Saurashtra Chemicals and Gujarat Heavy Chemicals have their plants located in Gujarat.

Thus freight cost of transporting the commodity to far off places in southern and eastern region works out to be very costly, around Rs 2000 per tonne. As a result of this the southern and eastern market are vulnerable to exports. China is believed to have tapped this market as a result imports, industry sources say, had gone up to over 170,000 tonnes in 1997-98 from almost negligible levels in 1994-95.

Industry sources say that this year the imports is likely to be substantially lower however, it isdangerous considering the current demand scenario. Lower demand is on account of MRTPC barring American Natural Soda Ash Corporation (ANSAC) and Sinochem, a chinese trading firm from exporting soda ash to India. However, imports from China still persists as individual players are exporting their produce to India.

On the demand front, demand from Soaps and detergents, which account for nearly 40 per cent of the consumption, have been growing by only five per cent. Even worse is the demand growth from the glass industry which is virtually stagnant.