South Korea's Posco (005490.SE) said Thursday it has struck a deal with Rio Tinto Ltd. (RIO.AU) for a 33%-44% cut in iron ore term prices for the year that started April.

Posco had agreed on a 33% cut on iron ore fines at $58.2 a metric ton and a 44% cut on iron ore lumps at $68.88/ton from the Australian miner, the company said in a statement.

"But talks with two other major iron ore suppliers - BHP Billiton and Vale - are still going on," company spokeswoman Choi Youn-joung said.

Analysts expect the deal with Rio to affect the price talks with BHP Billiton Ltd. (BHP.AU) and Brazilian mining giant Vale S.A. (VALE).

"Posco is expected to conclude the remaining deals at same or similar levels as Rio," Shin Yoon-sik at Meritz Securities said.

Though Posco May 15 cut the prices of all of products, including mainstay hot-rolled coils, stainless steel and shipbuilding plates, it will likely to post an improved operating profit in the third quarter, analysts said.

"That's because Posco lowered product prices under the condition of a 'conservative' 20% cut in iron ore contract prices," said Moon Jeong-up with Daishin Securities.

Posco's operating profit for the three months ended March 31 plunged 71% on year to KRW373 billion due to low demand and high costs arising from a weaker won.

Rio Tinto Tuesday signed a deal with Japan's Nippon Steel Corp. (5401.TO) for a 33%-44% drop in iron ore term prices for the 2009-10 contract year that started April 1.

Posco, the world's fourth-largest steelmaker by output, had asked suppliers to cut iron ore prices by 50%.

-By Kyong-Ae Choi, Dow Jones Newswires; 822-2198-2236; kyong-ae.choi@dowjones.com