By staff reporter Zhang Boling

(Caijing.com.cn) Brazilian miner Vale said it hopes to conclude year to March 2010 iron ore contract negotiations with the Chinese steel industry after it announced agreements with Japanese and South Korean steelmakers.

"Vale hopes to reach an agreement with China, one of the main markets," Vale said in a statement on June 12. It did not give details on the status of negotiations.

On June 10, Vale announced that it agreed with steel mills in Japan and South Korea on fine ore prices that are 28.2 percent lower than benchmark levels for the year to March 2009.

That is less than the 33 to 44 percent reduction offered by Australian miner Rio Tinto and far below cuts of at least 40 percent sought by Chinese steel mills. As a result, market speculation has arisen that Vale would face particular difficulty coming to agreement with Chinese steelmakers.

"We previously said just that Vale will not be the first to complete talks with China, not that Vale will abandon negotiations with Chinese steel mills," a senior official with Vale told Caijing.

Global miners usually start talks with steelmakers in Japan, China and Europe in November to settle iron ore contract prices before the start of the Japanese fiscal year in April. In most years, the price agreed upon by the first bloc of steelmakers is accepted as the global benchmark.

In February last year, Vale settled with Baosteel on a 65-71 percent hike in 2008 contract prices, while BHP and Rio Tinto in June settled on a 79.9-96.5 percent hike.

But negotiations have been particularly tense this year. China's benchmark steel prices have fallen up to 37 percent since the second half of 2008, contributing to a combined loss of around 3.3 billion yuan by China's 72 major steelmakers in the first quarter.

Chinese steelmakers are still in talks with the three global miners, Shan Shanghua, secretary general of the China Iron & Steel Industry Association, said in an interview with Caijing.

"We will proceed with negotiations based on our requirements; there is no hurry to settle before the end of June,"said Shan.

Vale's sales to China in the first quarter accounted for 44.7 percent of the Brazilian miner's global sales, at US$2.4 billion.

Since January, most Chinese steelmakers have been paying 60 percent of the contract prices set last year pending settlement of a new benchmark. Vale is selling iron ore to Chinese customers at 80 percent of the contract price agreed to last year in a temporary arrangement.

Full article in Chinese: http://www.caijing.com.cn/2009-06-15/110184599.html