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Group says 33% cut in ore price small

CHINESE mills won't accept the 33 percent cut in annual iron ore contract price agreed between Rio Tinto and other Asian mills, China's steel industry association warned yesterday.

"The cut didn't objectively and properly reflect this year's supply and demand situation regarding the international iron ore market," the China Iron and Steel Association said in a statement on its Website, in its first official response since Anglo-Australian miner Rio Tinto struck a deal with Nippon Steel Corp last Tuesday.

Other major Japanese and South Korean steel companies also later accepted the price.

China, the world's top steel producer and the largest ore buyer, has consistently demanded a price reduction of at least 40 percent.

The Beijing-based association, which leads Chinese mills in this year's price negotiations, said a reduction of only 33 percent will push the domestic steel industry floating in a sea of red ink.

"The price didn't represent the mutual interests and win-win relationship between steel makers and iron ore miners," the association said, adding that "China's iron and steel enterprises won't accept the price and won't follow suit."

Executives at Chinese steel mills have said there should be a deeper cut because a 33 percent reduction means contract prices are even higher than domestic spot market prices.

Still, analysts have also forecast it might be difficult for China to secure bigger price reductions given the country's higher iron ore imports over the past months.


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