Japanese steel mills, led by world No.2 Nippon Steel Corp, and three big miners including Brazil's Vale will open preliminary talks on 2009 term prices for iron ore this week, according to sources.
Japanese mills will send officials to miners for preliminary talks this week while Vale, Australia's BHP Billiton and Rio Tinto are all due to visit Tokyo next week for separate pricing negotiations.
The price talks on term supply for the business year from next April usually start in November in Japan, but have been substantially delayed as the steel market has tumbled amid the global economic downturn, making demand estimates difficult for both mills and miners.
Japanese steelmakers are expected to call for what would be the first cut in annual prices in seven years amid faltering demand and cutbacks in output, as well as expected strong pressure from Toyota and other carmakers for prices to be slashed on automotive sheet steel, their mainstay product.
JFE Steel Corp president Hajime Bada said last week he wanted iron ore prices for the year beginning in April to be cut at least to 2007/08 levels -- meaning Brazilian miners must cut by at least 39 percent and their Australian counterparts by around 45 percent.
China's steel firms, which began informal price talks late last year, last week joined JFE in demanding price cuts of around 40 percent.
Some analysts expect the annual price talks to reach agreement early as a recent recovery in iron ore prices could push mills to make an early settlement.
Spot iron ore prices plunged 70 percent from highs of nearly $200 per tonne last February to $60 a tonne in October, but have since recovered to about $80 a tonne.
Expectations for a steel recovery have gathered momentum in recent weeks as global output cuts tightened market conditions and forced buyers with low inventories to accept price hikes by some producers.
In 2008 price talks, Vale negotiated its price first and secured a 65 percent increase from Japanese mills. But Australian producers who settled later managed a nearly 80 percent increase.
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