A Chinese steel industry official said he is unaware of a deal reportedly to be reached with suppliers from Australia for a premium on the annual iron ore contract price.

"I have no knowledge of any such arrangement. Also, I have not seen the report so I am not in a position to comment further," Chen Xianwen, deputy director general of the China Iron & Steel Association, told XFN-Asia.

Citing sources from China's steel industry, the Australian Financial Review reported yesterday that Australian iron ore suppliers are likely to win a contract price rise of up to 85 pct.

That price hike would represent a premium of some 20 percentage points over the Brazilian iron ore contract price hike on sales to China, won earlier by Companhia Vale do Rio Doce.

If the report is confirmed, it would mean Australian suppliers succeeded in negotiating a so-called "freight premium" for their ore. The major Australian miners, BHP Billiton and Rio Tinto, have been seeking a higher price relative to Brazilian ore due to shorter supply lines to China.