The 23-year-old, who scored a last-minute winner in last weekend’s FA Cup win over Sheffield United, has become the Gunners’ increasingly important player as the season progresses.
Arteta challenged his fellow Spaniard in January, who was working his way back from a muscle injury, to fight for his place in the midst of reports that he wanted to end his Arsenal seasonal loan.
In the months since, Ceballos has won Arteta over, impressing with his workout effort and attitude.
Arteta said: “I’m really happy with him. I love how much he likes to play football, the passion he puts into every training session and every game. He puts his life into it in his celebrations, whether he’s on the pitch or at the bench.
“He is evolving the right way and for us, he has become a really important player.
“We ’re talking to the club-clearly we don’t own the guy, that’s not in our hands. The clubs need to negotiate to see what we can do.”