China Steel: Vale Agreed To Cut 4Q Iron-Ore Shipment Price By 20%-25%

China Steel Corp. (2002.TW) said Tuesday that Brazil's Vale SA (VALE) agreed to slash its price of iron-ore shipments for delivery in the fourth quarter by 20%-25%, as the biggest steelmaker in Taiwan is reducing capacity utilization amid weakening demand.

A China Steel official involved in the talks, who didn't wish to be named, told Dow Jones Newswires that the Brazilian miner agreed to price fourth-quarter shipments based on the Platts iron ore index in the October-December period, instead of using an average of the June-August period as previously agreed, which was higher.

Vale supplies around 30% of China Steel's ore needs and wasn't immediately available for comment.

The official said China Steel is still in talks with BHP Billiton Ltd. (BHP.AU) and Rio Tinto Ltd. (RIO.AU) over a price cut. The two Australian miners together supply 70% of its needs.

The agreement with Vale will be the first of a series of steps China Steel plans to take amid sputtering global demand.

The company said in November that it was actively seeking to defer or cut upcoming shipments of iron ore and coking coal from major suppliers.

-By Fanny Liu, Dow Jones Newswires; [phone]; [e-mail]