Global iron ore suppliers have started pre-negotiations with Chinese steel makers on the 2007 global iron ore prices, which are forecast to rise five to 10 percent.

Brazilian mining giant Companhia Vale do Rio Doce (CVRD), the world's biggest producer, has engaged in small-scale meetings with China's leading steel maker, Shanghai Baosteel, reliable sources told Xinhua.

Qi Xiangdong, deputy secretary general of the China Iron and Steel Association (CISA), predicted the import price of iron ore may alter slightly, but was unlikely to fluctuate sharply.

China's steel industry, accounting for nearly a third of the world's total production and consumption, has been seeking a greater say in the settlement of global iron ore prices. However, Chinese steel makers have been forced to accept a price hikes for four years in a row, with a sharp rise of 71.5 percent in 2005 and 19 percent in 2006.

The CISA said the growth of China's steel output had been slowing this year, indicating a slower growth in output for 2007.

Figures from the National Bureau of Statistics showed a fall of 0.9 percent in investment in China's steel industry in the first three quarters of this year, compared with the same period of last year.

Meanwhile, the industry has announced a cut in production of 100 million tons in the next five years to modernize outdated production lines.

Market analysts say global iron ore prices have been high for a sustained period. In the next few years, China's demand for iron ore is expected to tail off with streamlined steel production. The factors would strengthen China's bargaining position in future price talks.

Source: Xinhua