Furthermore, the China Iron & Steel Association said such a deal would drive Chinese mills into losses and did not represent a "win-win" relationship between the iron-ore supplier and buyers.
China is aiming to take iron ore prices at least back to 2007 levels, which would imply cuts of 40 per cent or more.
Chinese steelmakers are also looking to back out of a deal reached last year which meant they paid a premium for Australian iron ore to factor in a shorter haul compared with ore shipped from Brazil.
The first of the Rio deals was with Japan’s Nippon Steel and the second with South Korean steel producer POSCO and its Taiwanese counterparts CSC and Dragon. These deals mark the first time in six years that iron ore prices have fallen, although the price achieved is still the second highest on record.
Rio Tinto also reportedly said that about half of the iron ore produced by the company this calendar year has been sold on a spot market basis.
Rio's competitors BHP Billiton and Vale of Brazil, the leading supplier, have yet to announce any similar deals. However, media reports have suggested that Vale is seeking a price cut of only 27 per cent for its iron ore.
Analysts have said Japanese steel firms were likely to be more eager to lock in a term price than Chinese mills because of the nature of Japanese steel price contracts, while China's steelmakers are counting on a well-supplied spot market.
China has imported record amounts of iron ore for the last three months and has huge iron ore stockpiles at its ports, while steel production may be forced to slow down sharply.
Chinese steel production has been running at higher rates than last year, when output totalled 500-million tons. This year, the Government plans to cap output at 460-million tons, which would imply a more than 15 per cent cut in steel production in the remaining months of 2009.
Analysts are split on the likely outcome of the negotiations between China's mills and the big miners, with some expecting China is under no pressure and others saying the iron ore market could tighten if Chinese production picks up and Rio Tinto's price agreements diverts iron ore shipments elsewhere.
Includes commentary from Lloyd’s List DCN – www.lloydslistdcn.com.au