UPDATE 1-Brazil's Vale sees record 2010 iron exports

* Brazil's Vale sees record iron exports in 2010

* Booming China and recovering Europe spurring demand

* Company mum on 2010 benchmark price talks (Recasts, adds details, background throughout)

By Brian Ellsworth and Denise Luna

RIO DE JANEIRO, Jan 19 (Reuters) - Brazilian mining company Vale could export record volumes of iron ore this year, a company executive said on Tuesday, as booming Chinese growth and economic recovery in Europe spur global demand.

But Vale (VALE5.SA)(VALE.N), the world's biggest iron ore miner, offered few clues about the upcoming price negotiations led by China under the 40-year-old benchmarking system after last year's talks ended without a conclusive agreement.

Iron prices on the increasingly influential spot market have soared in recent weeks, boosted by a jump in China's commodity imports and leading analysts to predict benchmark increases this year between 20 and 50 percent.

"Demand is very strong in the market today," said Jose Carlos Martins, the company's executive director of ferrous metals. "You have a scenario of recovery in the West and strong demand in Asia -- the combination of those two things gives you a scenario of scarcity.

On price talks, he said the parties involved would reach a "mutually satisfactory solution" but declined to say whether or not Vale was in talks or when it expected to close an agreement.

Martins said Vale's production capacity for iron ore currently stood at 310 million tonnes per year with the company operation near capacity. He did not provide details on a scheduled 10 million tonne per year capacity increase at the Carajas mine.

Vale is currently holding minimal iron ore stocks, Martins added.

STRONG CHINA DEMAND

Analysts in recent weeks have given Vale bullish ratings on expectations of tight iron ore markets, growing demand in China, and reduced supply from India as a result of an export tax meant to keep more iron for the domestic steel industry.

Price talks collapsed into mayhem last year after China arrested executives of Australian miner Rio Tinto (RIO.AX) on charges of espionage. The company denies wrongdoing.

China has taken the lead in negotiations in the benchmark system, in which importers set prices with the world's three principal miners -- Vale, Rio Tinto and BHP Billiton (BHP.AX).

Vale's shipments to China jumped 40 percent in the first nine months of 2009, Martins said, largely because the financial crisis nearly halted U.S. and European iron imports -- leaving a growing China to absorb nearly all the supply.

"Practically all the iron in the world went to China; today you have the markets of Europe and Brazil in recovery," he said. "The situation is more normal this year."

At the same time shipping rates, which soared above $100 per tonne before the crisis, have dropped to around $30 per tonne -- making it easier to send commodities to China.

Vale has signed long-term shipping contracts at around $20 per tonne to reduce its exposure to price volatility, Martins said.