With two weeks left for the deadline on iron ore price negotiation, Brazil’s mining giant Vale expressed the importance of China’s market to its operations, easing the tense atmosphere and indicating desire to reach an agreement.

China makes up 70 % of Vale’s annual revenue”, the company’s executive director Tito Martins said last week. The Rio De Janeiro-based company is hoping to keep China’s 2009 contribution to total revenue at the same level, Martins said at a Beijing conference.

Vale announced the start of iron ore price talks with China on June 12 after cutting prices to steelmakers in Korea and Japan on June 10, with prices for fines decreased by 28.2%.

China Iron & Steel Association said the same day that it “wouldn’t accept the high price of iron ore”. The country’s top negotiator with miners has insisted that if Vale, Rio and BHP Billiton do not offer a larger price cut, it is ready to buy all the ore on the spot market.

The claim of Vale’s appreciation of Chinese market eased the atmosphere of the possible disagreement, making the first official expression of expectations for negotiation among the three mining giants.

“In the past negotiations China has treated Vale, Rio Tinto and BHP Billiton as three giants with common interest,” said Rongrong Fang, analyst from Lange Information Research Center. “We have to do it this way because there are tight demands for iron ore domestically from 2003 to 2008.”

But this year, as the global steel industry calls for production curtailment and reduction, the demand for iron ore will decline inevitably. So it has become a big problem for the three buyers to maintain stable production and sales.”

The analyst noted that if China reached the agreement with any of the three companies, the other two would suffer from losing the world’s largest steel producer and importer of iron ore.

For the domestic steel companies, the failure of negotiation will be a great loss, but it won’t be the end of the earth.” A person in charge of a steel company in Shanxi told the local newspaper. “Without suppliers from Australia, we still have those from Brazil, India and South Africa. What’s more, we can also make use of the domestic mineral resources.” He added.

Chinese steelmakers are still holding out for a larger cut, demanding that prices revert to the 2007-08 level with a cut of 40-45%.

Brazil’s Bovespa stock futures fell as commodities dropped after the Group of Eight finance ministers signaled they may start to withdraw stimulus spending, with Brazil-based Vale sliding as metal prices slumped, Bloomberg reported On Monday .

Vale dropped 3.3 percent to 32.05 reais. Copper led declines on the London Metal Exchange on speculation stockpiles in China, the world’s largest consumer, may be excessive. The country’s stores are the highest since March 2008 after four consecutive monthly import records.