South Korea's POSCO, the world's fourth largest steelmaker, has announced that it has reached a preliminary deal with global miner Rio Tinto for a 20 percent discount in iron ore term prices, but is seeking for prices to go down even further.
Commenting on the iron ore contract negotiations, POSCO's senior executive vice president Kwon Young-tae said, "Miners are demanding a 20 percent reduction but we believe it has to go down by 40-50 percent to 2007-08 levels, as steel market conditions are very poor, especially in Europe and Japan"
"We want to conclude the deal during April but miners have no reason to hurry up, because benchmark prices are usually settled above spot prices, which are currently quoted above 2007-08 contract level," Mr Kwon added.
Spot iron ore prices are quoted at around $64/mt, significantly lower than last year's contract prices of $91/mt but still higher than the 2007-08 level of $51/mt.
In addition, Mr Kwon said separate negotiations to settle coking coal prices were likely to be concluded during April with a price cut of around 60 percent, after Japan's Nippon Steel set the benchmark in March through a 57 percent cut on coking coal contracts with BHP Billiton Mitsubishi Alliance.