The China Iron and Steel Association (CISA) has said that the prices of for iron ore are going to rise significantly and the country could face serious difficulties if steel makers decide to pass on the rise to the markets.

The chairman of CISA, Deng Qilin has warned of rising prices in the country that could put pressure on down stream industries. The association is negotiating on the China's part on the iron-ore benchmark price and the comments the price rise seen as a potential hint of the ceding to the pricing power of ore majors like Vale S. A, BHP Billiton and Rio Tinto Ltd.

China is the world's largest importer of iron ore and operates around 1,000 steel mills. "The negotiations are difficult. These miners hope for a large rise in the 2010 benchmark price of iron ore. We can't digest the pressure of what they're asking us," said Deng.

He said that either these companies will take losses or will transfer them to the downstream companies in various industries like auto makers, shipbuilders and home-appliance manufacturers.

Some analysts have said that the miners are demanding that benchmark price be raised as much as 80% over the last year. Deng has not disclosed any figures demanded by the miners and also did not say anything about how much flexibility china is willing got offer.

China works out a benchmark price every year after discussions with the miners.

The country tried to hold out for steeper discounts than other Asian customers then the negotiations with the miners collapsed.

Deng has blamed the disorganized steel companies which are not even part of the China Iron and Steel Association for the breakdown of negotiations. He said the country has a disorderly import market.

He said because the Chinese mills are not able to speak in a unified voice the ore miners are taking advantage and pressing for their demands. He also expressed that the country's attempts to control ore imports by reducing the number of import licenses along with a premium on ore resale.