CVRD says starts talks for iron ore price rise

SAO PAULO, Nov 29 (Reuters) - The world's largest iron ore producer, Brazil's Companhia Vale do Rio Doce (CVRD), has begun talks with clients over ore price increases for the coming term, company president Roger Agnelli said on Thursday.

This is the time of year that CVRD (VALE5.SA)RIO.N begins negotiating with its main clients. China is the world's biggest iron ore importer, sourcing 24 percent of its imports from Brazil.

At a media event to launch CVRD's new trademark name "Vale," Agnelli did not say how big a price rise with which the company was coming to the table but said "market conditions are strongly demanding natural resources."

Analysts expect a price rise from April of about 25 percent after a 9.5 percent increase this year. Ore prices were raised 71 percent in 2005 by CVRD.

"We don't see a reversal of this trend," he told reporters. "Pre-talks for iron ore term prices have started."

Agnelli dismissed concerns over a possible weakening of U.S. economy saying that the current credit crunch would not likely lead to a recession, although there could be a modest economic slowdown.

"Demand is in China," the executive said, adding that the difficulty was balancing out prices based on demand in China, possibly weaker demand in the United States and slightly weaker demand in Europe.

When asked about the cost increases in the company's Onca Puma project in Brazil and Goro nickel project in New Caledonia, Agnelli said that they were in line with recent cost revisions but were rising due to the weakening U.S. dollar.

(Reporting by Andrei Khalip, Writing by Reese Ewing; Editing by David Gregorio)