“While steel manufacturers shared the government’s concern about current price situation, any attempt to regulate market forces operating on steel prices disregarding root causes will adversely affect growth of the industry,” Indian Steel Alliance (ISA) Moosa Raza said in a letter to Prime Minister Manmohan Singh.

ISA’s assertions comes in the wake of Steel Minister Ram Vilas Paswan asking the Prime Minister to impose export duty on steel, remove import duty and withdraw DEPB benefits for steel makers to contain prices.

Mr Raza said the input costs have shot up unimaginably high and have gone beyond the capacity of steel utilities to absorb the same.

He also cited that spot prices of iron ore have increased to US$150 per ton from US$50 a ton, while scrap prices shot up to US$500. “Even state-owned NMDC has raised contract prices by 50 per cent middle of last year. Coke from China has hit the ceiling with price of US$523,” he pointed out. “In the light of this, any talk of regulating prices will tantamount to putting the steel manufacturers between two prongs of a pincer,” he observed.

On one hand unabsorbable cost push would compromise the margins for steel producers, while on the other, a controlled or regulated regime would compromise its very survival, Mr Raza said.

In any case a regulator can at best regulate prices only at the producers level, but there were thousands of intermediaries and the step would encourage corruption among the inspecting agencies, he pointed out .

“Moreover, the government should keep in mind that any proposal to appoint a regulator will only open a Pandora’s Box. We, therefore, earnestly appeal to you not to take any steps, which will adversely impact the existing steel capacity in India and dampen its growth,” Mr Raza said.