ANALYSIS-Chinese steelmakers keen to bury CISA, not praise it

* "CISA circus" means mills likely to do own deals

* More spot, more index deals next year if CISA sidelined

* Steelmills to act quietly, minimise CISA loss of face

By Nick Trevethan and David Stanway

SINGAPORE/BEIJING, July 3 (Reuters) - China's hard-headed handling of iron ore price talks may pave the way for more spot deals and fewer annual contracts next year, as frustrated steel mills seek to break with the trade body that has led negotiations to deadlock. Industry observers and even Chinese media have said there was little support for the China Iron and Steel Association's hardline attitude, which has stymied talks that started last year, and may prompt the country's steel mills to quietly sign individual deals with miners this year and pay only lip service to the body in future talks.

China's International Finance News, linked to the communist party mouthpiece, the People's Daily, quoted an "insider" saying there was not much support for CISA's uncompromising attitude.

"CISA is now riding a tiger and can't get off," the report said. "The hard line has no strong internal support but compromise means defeat," the paper said.

For a profile of CISA's leadership, click [nPEK185551]

In public, the industry is standing shoulder to shoulder with the organisation, which in the past few days has softened its calls for a 40-45 percent cut in iron ore prices to a more moderate reduction, renegotiated on a sixth-month basis.

But the strain was starting to show with some producers.

"Talks should be only between the actual consumers and suppliers. But CISA said it is the coordinator for the whole industry ... we just let them do it," an official at a large Chinese steelmaker said.

CISA, ostensibly a trade body with 72 members accounting for about three-quarters of China's steel capacity, is a pasture for retired officials from government organisations and state-owned steel firms, some of whom are savvy market players while others are well-connected party relics.

It took over leading iron ore talks this year from Baosteel after criticism of the steel giant's failure to secure China's position as a price setter in 2006 and for signing too hastily and not getting a better price in 2007.

And exasperation with CISA's role in this year's talks, which have dragged on since October, may leave it, privately at least, taking a backseat to business interests next time round. "There's a lot of political sensitivity given that a lot of the steel mills' senior executives are members of the Party. They are all ambitious people with eyes on other posts, and to go against CISA's directives wouldn't look good," said Paul Bartholomew of Steel Business Briefing in Shanghai.

"But they ultimately serve their own interests. They had no problem last year discussing the idea of index prices, which was vehemently against CISA's instructions. We might be looking at a new universe where contracts are signed on a miner to mill basis, rather than a miner to country basis."