Japanese steelmakers and the world's largest iron ore supplier Vale is expected to reach an agreement to settle the iron ore price at $110 per ton, doubling the benchmark price of 2009, the China Business News reported, citing Japan's local media.

The report said the price will be applied from April, the beginning of Japan's fiscal year. Negotiations between Japan and two other miners, Rio Tinto and BHP Billiton, are still underway and likely to be settled at similar prices.

It's also reported that the two sides will probably agree on changing the pricing system, which has been set on an annual basis, to a three-month basis. Thus the 40-odd-year-old pricing system of iron ore will be abandoned, and the price will be closer to the spot price.

Neither the Japanese major steelmakers nor the Brazilian miner has confirmed the deal yet.

The new pricing system will put Chinese steel mills, which is already running on meager profits, in an even more difficult position, industry insiders analyzed.