Cranes load iron ore at a port in Nantong, East China's Jiangsu Province. File photo: VCG

The Chinese government is paying close attention to soaring iron ore prices and is studying measures to expand supplies to curb prices, a Chinese steel industry insider said on Tuesday, in a move that could affect Australia's massive iron ore exports.

"We believe that the supply side is highly concentrated and the market mechanism is not working, so we call for the authorities to play a bigger role in the event of market failure," Luo Tiejun, vice president of the China Iron and Steel Association (CISA), said at an industry conference.

Luo added that the soaring prices have received much attention at the government level and research into possible measures is in progress.

Chinese steel industry representatives have been calling for effective measures to strengthen the exploitation of iron ore at home and abroad and improve the reliability of supplies, in a bid to curb rising iron ore prices.

In the first quarter, China's imports of iron ore reached 283 million tons, up 8 percent year-on-year, while the import price averaged $150.79 per ton, up 64.51 percent year-on-year, according to figures released by the China Iron and Steel Association (CISA) on Tuesday. 

Australia has been the major source, accounting for up to 60 percent of China's total imports of iron ore.

Potential measures by Chinese firms to expand supply sources could also affect imports from Australia, as freezing bilateral ties already have the iron ore industry look at more options beyond Australia.

The calls for measures to curb iron ore prices also come as domestic steel prices have kept rising, fueled by iron ore import prices. 

By the end of March, China's steel price index had risen to 136.28 points, up 9.44 percent from the beginning of the year, data released by the CISA on Tuesday showed.

The continuous price surge was driven by multiple factors including demand, sharp rises in the prices of imported iron ore, a recovery in the international market and inflated global commodity prices due to the US' monetary easing policy, analysts said.

However, the irrational international pricing mechanism and over-reliance on a single import source were also important reasons, analysts noted.

The CISA is also working with the Dalian Commodity Exchange to reform the delivery system to reduce market speculation.

Domestic steel companies are also diversifying their sources of supplies from both China and abroad to fend off the impact of over-reliance on any import source.

China produced 221 million tons of pig iron in the first quarter of this year, up 8 percent year-on-year and up 13.38 percent from the first quarter of 2019, according to data released by the National Bureau of Statistics.

Meanwhile, the exploitation of the Simandou mine in Guinea, with the participation of a Chinese company, is expected to help cut the heavy reliance on Australia for imports.