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Chinese Iron Ore Talks Miss Deadline

Pricing talks between Chinese steelmakers and global iron ore suppliers dragged on Wednesday after they failed to reach agreement by a June 30 deadline.

SHANGHAI (AP) -- Pricing talks between Chinese steelmakers and global iron ore suppliers dragged on Wednesday after they failed to reach agreement by a June 30 deadline, reports and industry officials said.

China's steel industry group has rejected iron ore price agreements negotiated between Australian mining giant Rio Tinto and Japanese and South Korean mills.

A spokesman for Australian miner BHP Billiton Ltd., Peter Ogden, said Wednesday that negotiations were continuing but declined to give further details. A Rio Tinto spokesman was not immediately available for comment.

An official at the China Iron and Steel Association refused comment, saying any news would be posted on the group's Web site.

However, the official Xinhua News Agency cited CISA official Chen Xianwen, as saying that the talks would persist.

Rio Tinto Ltd., the world's third-biggest miner, was leading the talks. It agreed with Japan's Nippon Steel Corp. last month to cut its iron ore prices by about one-third. The Chinese side had been seeking cuts of more than 40 percent, but might soften its stance and settle on cuts somewhere between 33 percent and 40 percent below last year's prices, the Shanghai Securities News reported.

Other major ore suppliers are Billiton and Brazil's Vale SA.

CISA's 119 members represent 90 percent of China's steel output. The group took over the price talks this year, replacing Shanghai-based Baoshan Iron & Steel.

Traditionally the industry has accepted the results of the pricing talks as an annual benchmark, but in recent years negotiations have become increasingly drawn-out and confrontational, with the Chinese side publicly complaining that it should have more say as the world's biggest iron ore importer.

Chinese steel makers have objected to a planned tie up between Rio Tinto and BHP Billiton Ltd., which they say may give the miners an inordinate say over supplies and pricing.

Increasingly the mills have turned to the spot market for iron ore as they ramp up imports to build up stockpiles. As of late last month, domestic port inventories of iron ore had reached nearly 71.3 million metric tons, equal to more than a month's supply, the state-run newspaper China Securities Journal reported.

With the pricing deadline passed, iron ore miners have the right to dissolve current contracts and sell iron ore at spot prices. Those are now higher than the benchmark price, but more volatile.

It was unclear if spot prices are being used for sales to China's big steel mills now that the June 30 negotiating deadline has passed. A spokesman for Rio Tinto Ltd., the company taking the lead in price negotiations, refused to say.

A BHP Billiton spokesman was not immediately available for comment.

Associated Press Writer Rod McGuirk in Canberra and researcher Bonnie Cao in Beijing contributed to this report.

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