The head of China Iron and Steel Association (CISA) rebutted media reports that the CISA had accepted a reported 30 percent to 35 percent long-term contract price cut of the iron ore from a Brazilian company.

The CISA insisted that the iron ore price should fall back to the level in 2007, which meant a more than 40 percent price reduction of the annual contracts of iron ore, Shan Shanghua, secretary general of the CISA, was quoted by China Securities Journal as saying on Wednesday.

There were reports that the Vale do Rio Doce (CVRD), one of Brazil iron ore miners involved in this year's negotiation between China's steel mills and iron ore miners on a benchmark price for the material, announced the negotiation would be ended with a 30 percent to 35 percent price reduction within a couple of weeks.

Shan denied the market rumor and said the results of the negotiation remained unpredictable.

Chinese steel companies are calling for 2009 benchmark prices to decline to 2007 levels.

"The CISA will soon make a statement calling for a 45 percent price cut from the Rio Tinto and a 40 percent price reduction from the CVRD," said Shan.

The current iron ore price is only 60 percent of the long-term contract price with the Australian miners, and 65 percent of that with the Brazilian miners, said Du Wei, an Umetal analyst on Thursday.

Analysts believe China's iron ore import has exceeded the market demand, and steel dealers may face the risks of cutting price of their stockpiling.

Iron ore imports in April hit a record high of 57 million tonnes, up 33 percent over the same period last year.

"The uncertain price trend in China's steel market will bring risks of price decline to the iron ore market in the future," said Du.

(Xinhua News Agency May 21, 2009)