Chinese and Japanese steelmakers have demanded a record 40 per cent cut in iron ore prices in annual benchmark pricing negotiations, but are facing resistance from mining groups.

Vale, Rio Tinto and BHP Billiton, which account for more than 70 per cent of the world’s seaborne-traded ore, privately acknowledge that annual contract prices are likely to drop for the first time in seven years. But they are delaying negotiations because they believe ore demand will improve in the next few months.