UPDATE 1-Quarterly iron pricing to stay in place:Vale

* Quarterly system can lower volatility, will likely stay

* Analysts see possible move to monthly system

* Vale sees long-term iron prices in $90 to $100 range (Recasts, adds details, background, byline)

By Brian Ellsworth

RIO DE JANEIRO, July 30 (Reuters) - Quarterly pricing for iron ore will probably stay in place in the long term despite discussions of a move to a monthly system, a director of the world's largest iron miner Vale said on Friday.

Analysts say volatility in iron prices could push the mining industry toward monthly pricing only months after it abruptly abandoned the annual benchmark system.

Jose Carlos Martins, Vale's Ferrous Metals director, said the quarterly system will help reduce price volatility, though ultimately the market will decide on the best system.

"We need a system that can cope with the volatility, I believe that the quarterly price can cope with that and will help to reduce volatility," Martins said during Vale's second quarter earnings call.

"I think the quarterly system will stay ... but the answer will be given by the market."

After spiking earlier this year toward $180 per tonne, spot prices fell below quarterly prices, which could create strains similar to those that plagued the decades-old annual pricing system.

"I believe that iron prices will be sustainable in the range of 90 to 100 dollars per tonne in the long-term," Martins said.

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For details on Vale's Q2 earnings click: [ID:nN29115341]

For details on Vale's Q2 production click: [ID:nN29217312]

For a graphic on Vale iron ore production click:

link.reuters.com/gup72k

For a graphic on iron ore, click:

link.reuters.com/zed75j

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The mismatch between the spot price, which recently fell toward $120, and quarterly contracts, which are close to $140 per tonne, could allow speculators to build up stocks when spot prices are low and then buy on quarterly contracts when prices go back up.

Chinese buyers did this in the wake of the 2008 financial crisis with the benchmark system and the spot market, leaving miners selling cheap ore at benchmark prices to clients that often stockpiled it and resold it with a mark-up on the spot market.

That spurred the big three iron miners -- Brazil's Vale (VALE5.SA) and Australian miners BHP Billiton (BHP.AX) and Rio Tinto (RIO.AX) -- to scrap the benchmark system.

Vale on Thursday reported a 344 percent year-on-year jump in second-quarter profits on higher iron prices, stronger production volumes and the new pricing system.

"We are at the best moment in our history," said Vale CEO Roger Agnelli.

The average iron ore sale price in the second quarter was $91.93 per tonne, above the $64.76 price for the first quarter but still considerably below the price of around $120 that analysts had expected.

Part of this was due to carry-over of deliveries from the previous quarter that were priced under the old benchmark system but could not be delivered due to weather conditions, Martins said.

Some continued carry over will affect pricing in the third quarter, Martins said. (Additional reporting by Denise Luna in Rio de Janeiro and Marcelo Teixeira in Sao Paulo; Editing by Marguerita Choy)