RIO DE JANEIRO, June 19 (Reuters) - Brazilian miner Vale (VALE5.SA)(VALE.N) on Friday said it cut prices for iron ore to ArcelorMittal (ISPA.AS), the world's largest steelmaker, as the global slowdown reduces demand for the key steel ingredient.
Vale said in a statement it lowered the prices of iron fines by 28.2 percent, iron lumps by 44.5 percent and iron pellets by 48.3 percent -- the same percentages as its recent cuts to Japanese and Korean steelmakers.
Iron prices are set through a benchmarking system in which steelmakers hold annual talks with the world's three principal miners - Vale, BHP Billiton (BHP.AX) and Rio Tinto (RIO.AX) -- to establish the price.
The system has come under increasing strain due to growing volatility in commodities prices and a trend toward swaps, futures and spot market sales.
Chinese steelmakers are seeking a cut in prices of at least 40 percent over last year's prices that were set at the height of a five-year commodities boom -- though analysts expect they will settle for considerably less.