Chinese negotiators have backed down from a demand for a 45 percent cut in iron ore prices, settling for a 35 percent reduction from Australia's Fortescue Metals Group Ltd (FMG) and asking for the same deal with SA Vale, Billiton BHP Ltd and Rio Tinto Group.

Analysts said the cut was a face-saving gesture after seven months of stalled talks involving miners and the China Iron and Steel Association.

"The FMG agreement won't end the long talks between China and the largest suppliers," said Hu Kai, a Shanghai-based analyst with Umetal Research Institute. "Fortescue is too small to be representative in setting benchmark prices."