Mumbai: The pending hike in steel prices has upset steel minister Ram Vilas Paswan who has now threatened the private sector steel companies with the setting up of a steel regulatory body if they raise steel prices.

Following Paswan's threat, steel makers have deferred the planned price hikes.

Addressing the 'national steel consumers' council' meeting in Mumbai organised by the joint plant committee (JPC), Paswan said the government was unhappy with the rising steel prices ever since it came to power. He said the steel regulatory authority (SRA) would be the last option, but added, "We are ready with it. If there are frequent price increases, we will be forced to use our last option," he said.

According to Paswan, the proposed regulator would monitor the movement of steel prices and identify the demand-supply bottleneck though he did not indicate a time frame for setting up the regulator.

Tata Steel had recently announced a Rs500 per tonne price hike effective December 1, and others are expected to follow suit.

The steel industry attributes the rise in prices to increase in rail freight, coupled with higher prices of coal and gas. Steel Authority of India (SAIL) has decided not to hike prices for now though private sector steel companies do not seem to be in a mood to relent. Senior officials from Ispat Industries (IIL), Jindal Iron and Steel (Jisco) and Essar Steel said that as of now, no price increase has been decided and that a decision would be taken in a few days.

Though SAIL has not raised prices officials said the company would review its prices next month.

Steel makers and the bureaucracy have not welcomed the formation of the SRA at the steel ministry. Steel producers pointed out to the minister during the meeting that input costs have been increasing steadily over the past nine months. An IIL official told Paswan that a regulatory authority would be acceptable to the industry only if the government decided on a fixed return on investment for steel manufacturers, on the lines of the power industry and the fertiliser industry.

Bureaucrats raised doubts on the ability of a regulatory authority to monitor prices. According to a bureaucrat from the ministry, since there are multiple players and products, it would be impossible to regulate steel manufacturers.