NEW YORK — The price of iron ore, a key raw material for steel production, could be cut by more than half this year because of low demand caused by the global economic downturn, the chief executive of a major U.S. steelmaker said on April 21.

"Prices have tripled in the last three years and demand is now less than it was three years ago, so it's reasonable that cost increases should go away," James Wainscott of AK Steel Holding Corp said on a conference call with Wall Street analysts.

"The shoe is on the other foot now and we should see upwards of a 50-percent reduction in iron ore prices for 2009," he said.

AK Steel, which reported a first-quarter loss that was less than expected, said it expected to benefit from lower operating and raw material costs in the second quarter.

On Monday, Brazil's mining giant Vale said it was selling iron ore at a 20-percent discount to 2008 benchmark prices, in which the world's largest iron ore miners and steelmakers agree upon a fixed annual price.

New term prices normally take effect from April 1 but price changes are applied retroactively if they have failed to reach a deal by then, as happened this year.

Source: Reuters, April 21, 2009