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China Steel says the word’s largest iron ore miner, Brazil’s Vale, has slashed iron ore prices for the fourth quarter by 20 to 25 per cent.
The drop is almost double the ten per cent discount Vale hinted it would be willing to offer earlier this year.
The renegotiation is the first in a series planned by China Steel, which is also in talks with BHP Billiton and Rio Tinto.
The company is looking for similar discounts from the two Pilbara miners, and says it is also planning to defer or suspend some iron ore shipments.
China Steel’s renegotiations are the latest damp news for global iron ore, which has seen successive price falls in the second half of 2011 on the back of the euro-zone crisis and stunted US growth.
China Steel said while its talks with BHP and Rio were ongoing it had been “more difficult” to reach an agreement with them, which together account for 70 per cent of China Steel’s demand.
Rio and BHP have both previously said they do not expect to see a significant slow in demand from China despite global economic uncertainty.
In October Rio reported strong results for the third quarter and said the fundamentals or iron ore were “holding up well”.