Chartering brokers in China are watching with interest the latest developments in the annual iron-ore talks, which are being held against the background of a buoyant spot market.

Some brokers believe the spot price for iron ore is being kept artificially high to give mining players a better hand in negotiating a high settlement.

However, this is also pushing up rates for shipowners working the lucrative routes from Brazil and Australia to China.

Brazil's Vale and Anglo-Australian players BHP Billiton and Rio Tinto are asking for a 100% price increase from last year's benchmark, as they claim this is closely linked to the current iron-ore spot price.

The spot price in the Chinese market has surged to an 18-month high after the Spring Festival holiday, putting Chinese steel mills involved in the uphill price talks in a more difficult position.

Price for Fe 63.5% ore imported from India was $140 to $142 per tonne at the end of last week, $10 higher than before the break, which started on 12 February.

According to Xiben, a domestic steel spot-trading platform, the price for Fe 65% ore in Liaoning province, a major steel industrial base, had increased CNY 30 to CNY 50 per tonne by 25 February.

Analysts at Xiben say the price hike is the result of steel mills' restocking after the Chinese New Year.

Most mills have ceased stocking iron ore since the beginning of February because of traffic delays caused by the seasonal holiday rush and bad weather.

A Shanghai-based capesize broker told TradeWinds: "The spot price out of India is including the shipping rates, so there is quite obviously a positive correlation between iron-ore prices and shipping.

"Higher prices are related to high demand, hence high demand for shipping." The broker adds that the current high price of steel is also pushing up rates for shipping players.

"One should also take into account the steel price," he said.

"Without a high steel price nobody will pay a high iron-ore price, so a better indicator for shipping is the steel price." The broker also says that many shipping players are asking if the big mining groups are manipulating the current market to give them a stronger hand in the negotiations.

"The question everyone in China is asking is if the current spot price in China is too heavily influenced by the likes of BHP and Rio Tinto for the annual iron-ore settlement," he added.