According to Mr Shan Shanghua China Iron & Steel Association, Chinese mills would not cave in to the price cut settled by Rio with other Asian mills, and warn that they would trim steel production once three key ore miners cut off supply.

Mr Shan said "Chinese mills won’t budge on the prices and accept the 33% cut settled with Japanese mills. The decision is resulted from across the board loss in Chinese steel sector and severe iron ore oversupply.”

He said that “We would hold out for price cut of 40% to 45% the bottom line. As the world’s biggest iron ore importer, China should be the one determining Asian price. Last year, Rio Tinto has already broken the rule asking for freight premium after we clinched the deal with Vale."

Mr Shan also urged domestic mills, either small ones or big ones, to tie up together in boycotting Rio’s settlement with their Asian rivals. He said that “Leading Chinese mills, like Baosteel and Wisco are taking unified position in the ore talks. We hope non CISA member mills not sign up deals with foreign miners secretly."

Mr Xu Xiangchun senior analyst with Mysteel said "Steelmakers could turn to the spot market if they have failed to reach an agreement with ore miners. However, ore miners should better contemplate the consequences if they terminate supply to the world’s biggest ore importers."

An iron ore coordination team will soon be established by Ministry of Commerce, CISA and CCCMC. The team will strictly scrutinize the roundabout of ore imports and carefully examine the imports purchase contract and plan submitted by steel mills. Moreover, CISA will check the import qualification of steel mills and traders once again, and any trader who violates the agent regulation released early this year will be revoked the import license.

Mr Shan said in the first four months of this year, steel producers have reduced ore imports by 4 million tonnes while traders have increased tonnage by 39 million tonnes which inflated the market demand and exaggerated speculation.