Goldman Sachs last week altered its forecasts for 2010-11 contracts, saying annual iron ore prices could rise nearly 35 percent, up from an expected 20 percent increase.

"This year's situation is complicated as the three global miners have realized that they have nothing to lose if they fail to reach an agreement with the Chinese steel mills. Chinese steelmakers will have to sign contracts with them individually, at the same prices reached by other Asian mills, as they did in 2009," said Hu.

Last year's iron ore price negotiations reached an impasse in June after China's chief negotiator the China Iron and Steel Association insisted on a 45 percent discount over 2008's prices, rather than the 33 percent cut accepted by the Japanese and South Korean steel mills.

Hu said Chinese steel mills should look at diversifying their iron ore supplies and also explore domestic mines to reduce dependence on the three miners.

Domestic mines usually contain lower percentages of iron ore, compared with imported ore, and cost more to be explored.