CISA: Vale negotiating with China for 10 percent reduction of iron ore prices

Companhia Vale do Rio Doce (Vale), the world's biggest iron ore producer, is trying to persuade Chinese steel mills to accept a 10 percent discount for 2009 iron ore supply contracts compared to last year's contracts, according to the executive director of the Steel and Iron Association in China (CISA) and the president of the Metallurgy Chinese Association, Zou Jian.

Vale has declined to comment on this declaration. Vale's Executive Director for Ferrous Minerals, Jose Carlos Martins, told press that the firm is waiting for negotiations amongst Australian miners and Chinese mills to conclude before it will decide on a proposal.

The Wall Street Journal recently reported that all three of the major iron ore producers, Vale, BHP Billiton and Rio Tinto, are seeking a price increase from Chinese mills of as much as five percent from last year's contract prices; however, CISA has refuted this plan, calling it, “daydreaming.” Chinese mills are said to be holding out for a decrease of 30 to 50 percent compared to the prices agreed to last year.