Reuters quoted Mr Roger Agnelli CEO of Vale as saying that he sees no reason to start term price negotiations with steel companies until the global financial crisis eases and normal demand for ore returns.

Mr Agnelli however said that he hoped that ArcelorMittal would honor its long term ore supply contract with Vale but was open to reaching an agreement if it could not.

Vale had earlier announced a 10% cut in iron ore production as well as cuts in nickel and aluminum output. One of Vale's principal clients, steelmaker ArcelorMittal has already announced output cuts.