Iron ore, an all-important mineral for economic expansion, has long been a hot topic in China-Australia economic relations.

In the ongoing iron ore price talks, Australian mining giants demanded a 40 percent price increase for the mineral from 2009 levels.

Some market analysts argue that the price hike is unreasonable while others underline the importance of iron ore trade between the two countries.

Wang Lei takes a closer look.

 Chinese mills, led by China's largest steel maker Baosteel, are in Singapore holding discussions with Australian mining giants BHP Billiton and Rio Tinto.

Yu Chenjun, a market analyst at Shanghai-based Guotai Jun'an Securities, says the iron ore price negotiation will not come to a satisfactory result easily.

"In my opinion, Chinese steel mills can only afford a price hike of 30 percent at most. But Australian miners are seeking a 40 percent rise, as they demanded in talks with Japanese and Korean companies. The negotiation with Chinese companies will surely go on despite these different expectations. But it's very hard to ink a deal at an early date."

Japanese and Korean steel mills have not accepted nor declined the 40 percent hike although they completed the first round of talks with Rio Tinto.

Mark Pervan, a commodity researcher at Australia and New Zealand Banking Group, says the price hike is reasonable as strong demand of iron ore may drive up the price on the spot market.

"We've seen a very strong gain in the spot market and a very strong demand for iron ore, particular from China. The spot market is now 50 percent above last year's contract price. In fact, a 40 percent increase outcome would actually be cheaper than for Chinese steel mills to buy in spot market."

Pervan stresses that iron ore trade is very important for China and Australia and the two sides should deepen cooperation in the sector.

"I think the relationship between China and Australia is very important. We have the natural resources that China requires. China has the natural demand we require. So I think that iron ore producers and other natural resources producers will be very keen to foster strong relationships with Chinese because we are long-term customers."

China imported a total of 630 million tons of iron ore last year as it rebounded from the economic crisis. The figure was up 42 percent year on year.

Wang Lei, CRI news.