Logic suggests that the dynamics of an iron ore supply glut, a steel industry collapse and a new Team China approach to this year's iron ore benchmark price negotiations would lead China to overturn five years of national humiliation and bring Vale, Rio Tinto and BHP Billiton to their knees. Luckily for Australia, there is little that is logical about iron ore in China.
In February the Herald revealed that the China Iron & Steel Association's boss, Shan Shanghua, had inserted his personal representative into the annual price talks for the first time. Shan is best known in Australia for crippling Chinalco's public relations campaign by boasting that the company's investment in Rio Tinto would "break the duopoly in Australian iron ore supply".
Initially, inside the normally secretive negotiating room at Baosteel's Shanghai steel works, the CISA representative sat behind Baosteel's Ding Shouhu and confined himself to an advisory role. In recent weeks there has been something of a mutiny.
"This year CISA is claiming they are the leader and Baosteel is only assisting them," says a mining company insider. "Baosteel seems very frustrated."
The new CISA negotiator has threatened to unite the whole Chinese steel industry into an import cartel for the common purpose of screwing down this year's benchmark price.
He has promised to set not only the contract price but also the import volumes for all of China's major steel mills, holding out the lure that the greatest volumes will be reserved for whichever miner cracks first.
CISA has largely bypassed BHP and Vale and channelled negotiating efforts to Rio Tinto as well as second-tier mining companies, notably Fortescue, in the belief that the more vulnerable mining companies will have to crack.
Meanwhile, the iron ore market should be shifting decisively in China's favour.
Figures on Friday showed China imported a world record 52 million tonnes of iron ore - up 10 per cent from February - despite sluggish Chinese steel consumption.
Port stocks have risen by
10 million tonnes or about 15 per cent since February. Chinese buyers say (and the miners deny) that Vale, Rio Tinto and BHP Billiton are offering 40 per cent discounts as routine and as much as 50 per cent in secret high-volume deals.
Chinese mills are armed with near-record stockpiles and would seem well placed to destroy a desperate mining opposition. Instead, Shan's negotiating strategy to set the benchmark contract price is in chaos.
"In the past the buyers have been played like servants," says Jerry Wang, who runs a Beijing trading company, Fortune Steel Resources, which buys and sells 1 million of the 750 million tonnes of iron ore China consumes each year.
"Now the market has changed, the situation of the two sides has inverted, but it seems the servant is not quite used to his new role as the lord."
The problem with Shan's ever more fearsome threats is that he lacks the power and the credibility to make them happen.
Fortescue is unlikely to buckle to Chinese pressure and make the first settlement because it knows the bigger miners are likely to ignore it, leaving Fortescue stranded with discount contracts.
Andrew Forrest can't rely on the steel association's promise of high volumes because he knows it doesn't have the credibility or the power to force its steel-making members to follow through.
And what looks like a strategic effort to build stockpiles and pressure mining company negotiators is in fact the result of accidentally letting the big miners break through China's unofficial import barriers.
Until November, the steel association and the large, mainly state-owned mills that make up its membership ran a two-tiered system that reserved the higher-quality, lower-cost Brazilian and Australian ore for themselves. Smaller and mid-sized mills and traders were forced to buy domestic and Indian iron ore on the domestic spot market, often at twice the price.
But the struggling large mills walked away from their import contracts when the spot market price collapsed below the benchmark price late last year. A space opened up for the global miners to directly supply smaller and mid-sized mills and traders across the country.
Wang, at Fortune Steel, snapped up most of this year's requirements in November when Brazilian and Australian suppliers offered him a 40 per cent discount to the benchmark price. Wang bought too early. He's now stuck with a few hundred thousands tonnes of iron ore that he can't sell.
Nevertheless, for the first time traders like him have limitless access to the best imported stuff.
Shan Shanghua has publicly instructed Chinese mills to buy domestic ore instead of imports, but nobody is listening. The high-cost, unregulated backyard Chinese iron ore mines no longer have a market. In 2007 about half of China's iron ore supply came from domestic mines. Last year the proportion slipped to 40 per cent, with imports of 444 million tonnes and domestic production of about 300 million tonnes.
This year, the best industry surveys suggest domestic production has fallen by another third, to an annual rate of about 200 million tonnes.
While Chinese iron ore consumption is falling, global miners are set to increase their annual China sales by about 150 million tonnes in just two years. CISA might yet achieve a benchmark price cut of about 40 per cent but the result will be largely meaningless, at least in China. The whole benchmark system is breaking down.
The country's 500-odd steel companies are splintering and the global iron ore triopoly has broken open the Chinese market. This is bad for China's large mills and their industry association, but it's good for China. The more efficient private sector is filling the space vacated by the state-owned mills and creating something more like a level playing field.
It's good for Australia, too. This year's fall in export receipts will not be quite as catastrophic as Australian policy makers have been bracing for.