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The third round of negotiations on iron ore price has been fully underway across the world. Unlike in the past, it might be China to first decide the price this time, International Finance News reports.

This round of bargaining was first launched in China on Feb. 17, when Shanghai Baosteel Group Corporation, representing 16 major steel makers of the Chinese mainland, engaged in tense talks with the world's three largest ore exporters: Companhia Vale do Rio Doce (CVRD) of Brazil, RioTintoPLC of Britain and BHP of Australia. Japan's five iron and steel giants--Nippon Steel, JFE, Sumitomo Metals, Kobe Steel and Nisshin Steel-- started their talks two days later. Talks in Europe also began simultaneously in Paris, Duisburg and London.

The first final price may for the first time come from China if things go smoothly instead of being determined in Tokyo or London as usual, insiders say.

Suppliers and importers are still sharply divided at the delicate final stage. The three giant ore producers insist on further price hike in 2006 due to short of supply driven by China's strong demand. But steel makers across the world ask for a lower price since supply would slow down this year.

The negotiations will be very harsh and an agreement is hard to reach within pre-set time, experts say.

Currently China has a large amount of iron ore in port stockpile, which are enough for two months' domestic production, a foreign trade official from the Ministry of Commerce pointed out, warning domestic companies of the risk of unmeasured imports.

In addition to increased supply, the tight ore supply is also eased by joint production cut of global iron and steel makers. Major Japanese and European companies have decided to produce less and Chinese makers reached an agreement of limited production as early as last yearend. According to the national policy for the sector, during the 11th Five-year plan period (2006-10), China will winnow out 100 million tons of outdated iron production capacity and 55 million tons of steel capacity.

Statistics show in 2005 China imported 275 million tons of iron ore, a rise of 32.3 percent and accounting for 43 percent of global seaborne trade.

As the world largest iron ore importer, the Ministry of Commerce says, China should naturally play a bigger part in 2006 international ore pricing.

Despite its determination, China apparently faces many difficulties. British paper Financial Times quoted a related official as saying that China might still be shunted aside in core negotiations, and the price, as usual, would be set through separate bilateral talks between ore suppliers of Australia and Brazil and steel makers of Japan and Europe.