Vale to almost double iron price for Brazil-report

* Iron ore producer planning two-part price increase

* Would affect domestic steel industry

* Could set a baseline for benchmark talks with China

RIO DE JANEIRO, March 4 (Reuters) - Brazilian miner Vale, the world's largest iron ore producer, is planning to nearly double iron prices for domestic steelmakers by April, a steel industry publication reported on Thursday.

This could signal that Vale (VALE.N)(VALE5.SA) is preparing an aggressive stance in benchmark prices talks with Chinese steelmakers after insisting spot market prices -- currently double the benchmark -- must be seen as a reference for this year's price.

"Brazilian mining group Vale is seeking to increase its iron ore prices for domestic buyers by 40% in March and another 40% in April, according to normally reliable sources in the domestic iron and steel sector," a report by Steel Business Briefing said.

That would imply a 96 percent increase in the price of the steel-making ingredient over those two months. The report did not describe how the price hike would be calculated.

Brazilian steelmakers usually pay the annually negotiated benchmark price for iron supplies, but receive a discount to reflect the freight costs associated with overseas clients.

"Concerning iron ore price negotiations, Vale has nothing to comment," a spokeswoman said in an e-mailed message. Brazilian steelmaker Usiminas (USIM5.SA) did not immediately provide comment on the report.

Spot market prices for iron ore have soared above $130 per tonne, spurred by strong demand from Chinese steelmakers and global strength in commodities markets.

Vale has consistently defended the benchmark system, despite the growth of a spot market and the rise of derivative-based trading for iron, but has recently signaled its willingness to sell on both spot and benchmark terms. (Reporting by Brian Ellsworth; Editing by Walter Bagley)