China's Iron and Steel Association maintained its campaign to slash 2009-2010 iron ore term prices by 40% or more, putting out a report on its Web site Sunday that rounded up opinions from a string of unidentified Chinese mill executives.

"Many mills have said it would be difficult to accept a 33% cut, and they await a bigger cut," the report said, later citing similar sentiment from officials from Wuhan Iron and Steel International Trading Corp. and Baosteel Group Corp.

Anglo-Australian miner Rio Tinto Plc (RTP) agreed last week on price cuts with Japanese and Korean mills that at their baseline was 33% off last year's terms.

Chinese steel interests say a 33% discount would mean ore prices are still higher than 2007 levels by $10 a metric ton, amid weaker demand for steel, the report said.

But mills and traders may have to accept a 33% cut if spot iron ore prices move higher, an unidentified official from Shandong Laiwu Steel International Corp. was quoted as saying in the report.

The Laiwu official added that spot prices aren't likely to be pushed higher, because "spot prices are primarily decided by demand, and currently steel demand has not recovered."

The quandary for Chinese negotiators is that their position depends on projecting a sense of weak demand, even as policymakers guide the Chinese economy toward recovery.

The numbers in May didn't strongly favor the Chinese side.

Spot delivery prices for Indian ore rose slightly in May, by about CNY10/ton for 63% fines and CNY5/ton for 62% fines.

Steel prices have also risen since late April, according to the China Iron and Steel Association's data.

Industry analysts believe steel demand is tentatively recovering because of the seasonal resumption of building activity, stimulus-led infrastructure projects and the auto sector's revival.

Spot prices are currently 30%-40% below last year's term rates.

-By Chuin-Wei Yap, Dow Jones Newswires; 8610 6588 5848; chuin-wei.yap@dowjones.com