China steel group sees iron ore deal by end-June

SHANGHAI, June 2 (Reuters) - The chairman of the China Iron and Steel Association said on Monday he expected China's steelmakers to reach a deal with Australian miners in prolonged iron ore price talks by the end of June.

"I think both sides hope to complete the negotiations ahead of the (June 30) deadline," Zhang Xiaogang told reporters on the sidelines of an industry conference.

He also appeared to soften his stance on the possibility of Chinese mills accepting a freight premium sought by the Australians.

"I think whether we reach an agreement with the Australian miners with a premium linked to freight rates depends on the negotiations between Baosteel and the miners," he said.

"It depends on what interests both sides are focusing on," he said.

Chinese steel mills, including Baosteel, the country's largest, are locked in 2008 price talks with Australian miners Rio Tinto Ltd/Plc (RIO.AX) (RIO.L) and BHP Billiton Ltd/Plc (BHP.AX) (BLT.L).

Brazilian miner Vale RIO.N (VALE5.SA), the world's top iron ore producer, has already agreed on a price hike of 65 to 71 percent. (Reporting by Alfred Cang; Writing by Edmund Klamann; Editing by Anne Marie Roantree)