The China Iron and Steel Association (CISA) has reached an agreement with Anglo-Australian Fortescue Metals Group Ltd. (FMG) on a 35.02-percent price cut for iron ore fines, said a CISA official on Monday.

CISA secretary-general Shan Shanghua said the association reached an agreement with FMG for July-December imports of Fortescue's rocket fines (on an FOB basis) for 94 US cents a drymetric tonne unit (dmtu).

The agreed price represented a 35.02-percent price cut on 2008-2009 iron ore fines contracts and a 50.42-percent cut in the price of iron ore lumps.

Liu Zhenjiang, Party secretary of CISA, said the agreement was an important step in price negotiations for China's iron ore imports but there was still a long way to go.

Analysts said the new deal was a further successful attempt by China to break the impasse with the world's three biggest iron ore miners, Australia's Rio Tinto and BHP Billiton and Brazil's Vale, in negotiations over iron ore contract prices.

FMG said in a statement the agreement commits China to acquire about 20 million wet metric toones from Fortescue between July 1 and December 31.

Under the agreement, CISA has guaranteed priority will be given to FMG to negotiate iron ore prices for 2010 if annual pricing negotiations are conducted.

(Xinhua News Agency August 17, 2009)