POSCO, the world No. 4 steelmaker, proposed a 50 percent cut in iron ore prices last Friday, the China Business News reported Monday.

Rio Tinto, the world's second-largest iron ore producer, was reported to have offered a 20-percent price cut to major Asian steel customers. However, China's steel groups insist that they want a cut of at least 40 percent.

Industry insiders noted that this year's iron ore prices are bound to fall and it's only a problem of by how much. This is also the focus of current negotiation between the parties on the supply and demand sides.

Kwon Young-tae, vice president of POSCO, said over the weekend that his company was in preliminary negotiations with Rio Tinto and was demanding a lower price contract.

"Ore producers are talking about a 20 percent price cut, which would leave prices much higher than we previously expected," Kwon said. "We think iron ore prices will have to drop by at least 50 percent from the 2008/09 contract level, and we need to complete the negotiations in April."