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Vale not in 2009 ore price talks yet

BRAZIL'S mining giant Companhia Vale do Rio Doce said on Saturday that it has not started negotiations to set 2009 iron ore prices with steel makers.

The world's largest iron ore miner said it would wait until its Australian rivals set new prices before committing to a new rate with its clients.

In 2008, it lost out after concluding price talks first. Australians clinched better deals shortly after.

"Whatever they decide (on prices), we'll analyze. If it interests Vale, we'll follow. If it doesn't, then we'll see what can be done," said Jose Carlos Martins, Vale's executive director for ferrous minerals.

Due to weaker demand for iron ore, Vale and rivals BHP Billiton and Rio Tinto Group are expected to concede cuts to their clients in annual negotiations.

Asian clients have said they are seeking aggressive price cuts of up to 40 percent amid cooling demand after years of rises. In 2008, Vale got rises of up to 71 percent, while Australian firms got 96 percent gains.

Martins said current iron prices, which have a discount of 10 percent to 20 percent over prices agreed last year with clients in Europe, Japan and South Korea due to weak demand would be "reasonable" for 2009.

He said the "provisional discounts" are 10 percent for Japanese and Korean clients and 20 percent in Europe.

In China, "most (of the deals) have been done on spot prices," Martins said. But Vale's high-quality iron ore prices were getting a premium of US$8 to US$12 per ton over spot prices, he added.

Earlier this month, Vale, which is known for exclusively selling at annual benchmark prices, said it was prepared to adopt more flexible pricing methods for selling ore. With spot market prices falling, some steel mills and miners are keen to do business linked to the spot market.


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