Europe's largest iron ore miner has agreed to sell iron ore pellets to a German steelmaker at a 48.3% discount to last year's price the same discount applied to other pellet settlements this year.

Sources close to the deal told Platts that the iron ore supply agreement, valid for 2009-1010, is only the second this year in Europe and goes some way to validating this price as a benchmark for pellets this year. The other was agreed between Brazil's Vale and ArcelorMittal.

Other EU steelmakers are still reluctant to accept the price cut negotiated between Vale and AM, which they view as too small.

Several EU mill sources told Platts this week that they still think the AM-Vale price does not reflect the poor state of the European steel market. A mill source said that "It is simply the fact that the agreement on fine ore does not at all match the demand of the European steel mills.”

(Sourced from Platts)