Shougang Corp. won't interfere with Mount Gibson Iron Ltd. (MGX.AU) on the issue of setting iron ore prices, a senior executive said Monday.

"They (Mount Gibson) can set their prices based on global market prices, and we won't interfere with that," assistant president Cao Zhong said.

Shougang owns a total of 40% of Mount Gibson Iron, whose customers include Stemcor Ltd., Citic Australia Trading Ltd. (CAL.AU) and Japan's Marubeni Corp. (8002.TO).

Mount Gibson Friday said it had set its contract iron ore prices in line with cuts agreed last week between Rio Tinto PLC (RTP) and Japan's Nippon Steel Corp. (5401.TO).

Rio Tinto and Nippon Steel agreed on cuts of 33%-44% in a deal that would typically set a benchmark for the industry. Chinese steelmakers, however, have been holding out for deeper cuts.

But China's steel industry association said Sunday it won't adopt the 33% price cut as it would result in overall losses for China's steelmakers.

Cao declined to comment on whether Shougang would incur losses, but said the company has lowered product prices amid weaker demand.

-By Jackie Cheung, Dow Jones Newswires; 852-2802-7002; jackie.cheung@dowjones.com
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