BEIJING, June 5 -- CIA. Vale do Rio Doce (Vale), the world's largest iron-ore producer, insists China should accept an increase of 19 percent in ore costs, saying a lower rate wouldn't be fair to the company's other clients.

    Reaching agreement with China's steelmakers, who account for 43 percent of global imports of iron ore, is just a matter of timing, Roger Agnelli, chief executive officer of Brazil's Vale said in an interview Friday.

    Domestic steelmakers have been seeking to set prices for more than half a year after a record increase in 2005. Their bargaining position weakened May 16 when Germany's ThyssenKrupp AG became the first steelmaker globally to agree to the new price.

    "The market is clearly tight," said Tim Barker at BT Financial Group in Sydney, which manages and advises on the equivalent of US$54 billion. "The Chinese need the material, and they will need to come to an agreement with the producers."

    Agreeing on an increase of less than 19 percent with China is "not fair" to other clients, Agnelli said during a visit to Seoul, South Korea. "The market is showing that demand for iron ore is very strong."

    The 19 percent price increase, which will apply to ThyssenKrupp as well as mills in Japan and South Korea starting April 1 this year, is the second-biggest price jump in 25 years, according to ABN Amro Holding NV. Prices rose 71.5 percent last year. Rio de Janeiro-based Vale first asked for a 24.6 percent increase and domestic mills said they wouldn't pay more than last year.

    "There have been great changes in the steel and iron ore industry in recent years because of China, and a great amount of investment is needed to catch up with demand," Agnelli said. "We're lagging behind demand."

    Vale said it plans to invest US$4.6 billion this year, the largest amount ever for a non-state-run Brazilian company. The company will increase output by 30 million metric tons this year and in 2007, after output more than doubled in recent years.

    Baosteel Group Corp., which is representing domestic steelmakers in the talks with Vale as well as BHP Billiton and Rio Tinto Group, may accept the 19 percent gain, a Baosteel executive involved in the talks said May 30.

    Baosteel will meet with Vale, Rio Tinto and BHP this month, said the executive, who declined to be identified before the meeting takes place.

    Qi Xiangdong, vice chairman of China Iron & Steel Association, would not confirm Friday when the next round of ore price talks would take place.

    The talks are just a formality, and we're all expecting them to sign the deal within a week or so, Luo Wei, a Shanghai-based analyst with China International Capital Corp., said.

    Vale, Rio and BHP account for three quarters of global seaborne iron ore trade. Their bargaining position in the talks with mills was also boosted after cyclones and a rail disruption cut supplies from Australia and Brazil in the first quarter of 2006.

    "We respect the business culture in each country," Agnelli said. "We're waiting for China's answer. We don't want to enter a battle."

    Domestic imports of iron ore have risen by 23.5 percent to 108 million tons in the first four months, according to official figures.

    Steel output in China reached a record 38.3 million tons last month, an increase of 27.5 percent from a year ago, the Beijing-based Mainland Marketing Research Co. said May 17.