This year's iron ore contract price is unlikely to be made in China, as China's steel association widens its rift with mining companies and even its own steel mill members.

A mining executive told the Herald that the China Iron & Steel Association had so far "repeated all the mistakes of last year and added a few more" in this year's iron ore dealings. The mistakes included lobbing bombastic threats without having any strategy for following through.

Nearly two months ago the iron and steel association told Vale, Rio Tinto and BHP it would adopt a harder line and would not accept anything less than a discount "China price" compared with other countries.

It also said it would repeat last year's (disastrous) experiment of having officials from the steelmaker Baosteel lead negotiations while consulting its officials in the same room.

Baosteel has installed a new negotiator, Wang Liqun, to replace last year's negotiator, Ding Shouhu, according to industry sources.

Since the ultimatum the big mining companies have not heard anything from the association, no substantive negotiations have occurred and the spot price of iron ore has risen by about a third, to $US135 a tonne.

Prices have risen because of frenetic Chinese buying. It has been driven, in part, by fears that a new export tax and a major corruption crackdown on Indian iron ore would reduce Indian imports.

The association "is behaving every bit as irrationally as they did last time", said a senior mining executive. "There is no way that anybody is going to want to engage with them."

The executive said the recent reports of Chinese hacking and spying on Google and other US companies had not helped.

In the meantime, genuine talks have progressed between mining companies and Japan's Nippon Steel.

Chinese media reports this week say major Chinese steel mills, including Baosteel and Wuhan Iron & Steel, have taken it upon themselves to fill the leadership vacuum and rebuild bridges with the mining companies.

"Collapse of the 'China price for iron ore' " said a front-page headline in the 21st Century Business Herald.

Xu Xiangchun, an iron ore analyst with a Shanghai consultancy, Mysteel, said the ''China price'' was "only a desire of Chinese steel mills" which "shouldn't be forcibly imposed on anybody".

Hu Kai, an analyst with another Shanghai consultancy,, predicted the association might get its "China price" after all, but one that was higher than everybody else's.

"Japan and Europe stick to contracts and China imports all from the spot market," he predicted. "That means China will pay different price for every shipment."

Mr Hu said no iron ore talks were occurring in China. He said the Stern Hu case had had "a negative impact" and helped steel the mining companies against further heavy-handed tactics by the Chinese Government and association.