China's largest steelmaker the Baosteel Group Corp said Friday it have settled the iron ore price for 2007, at a 9.5 percent increase from last year, with the major Brazilian ore producer Companhia Vale do Rio Doce (CVRD).

The unprecedented quick negotiation, which is compared with the long-winded seven-month talk last year was first time led by China, the world's number one ore importer.

Wang Liqun, vice chairman of the China Iron and Steel Association (CISA) said the price is fixed based on market demand and supply, after extensive consultations among all parties.

As the steel and iron industry still has potential for growth, and the world economy is on the rising curve, ore supply is likely to remain tight, hence driving up the price, he said.

Luo Bingsheng, another CISA vice chairman said Wednesday that China is expected to import around 325 million tons of iron ore next year, a rise of 18.2 percent year-on-year, which is much lower than the 30 percent growth since 2003.

Expected appreciation of the yuan and a lower freight price next year will offset part of the price hike. This explains why the Baosteel has accepted the price, said Xu Xiangchun, with the industry consultancy Mysteel.

CVRD is the world's largest iron ore producer. It became China's biggest single supplier in 2005. .

Source: Xinhua