Premier of China, Wen Jiabao, has been asked by a number of steelmakers to direct the government to take on ore price negotiations, according to the official China Securities Journal.

The steel mills have long had a system of negotiating annual benchmark prices with the top global iron ore producers, Vale, Rio Tinto and BHP Billiton.

But in 2009, China failed to reach an agreement after CISA (China Iron & Steel Association), which was leading the negotiations, demanded a price reduction of 40-50%. Chinese mills used a temporary price cut of 33% instead, but this year the price of iron ore has soared due to strong demand from Chinese mills and global strength in commodities markets.

The vice president of CISA and the heads of more than 10 steelmakers are therefore asking that the government take up the issue of rising iron ore import prices, which are hampering their ability to compete on an international level.

China produces almost half of the world’s steel.