Prices of iron ore are likely to increase next year, underpinned by China’s escalating demand, Brazil mining company Vale said.

Vale chief executive Roger Agnelli said it would be a positive year with iron prices showing a tendency to rise, but he was not sure by how much.

Spot prices of iron are 30% more compared with 2009 contracts on a freight-adjusted basis, which shows that there is constant raw materials demand as the economy recuperates from the global financial slump.

China, the biggest iron importer in the world, and the world’s top mining companies Vale, Rio Tinto and BHP Billiton currently negotiated seaborne iron prices.

“Vale, the world’s largest iron ore producer, had not yet started talks with Chinese steelmakers to determine 2010 benchmark prices,” Agnelli said. “If you have contracts that are valid until April, there is no reason to accelerate the negotiations.”

The 2009 contracts are still officially part of negotiations, however, they are based on a 33% reduction compared with last year’s prices as provided to Japanese and South Korean steelmakers.

“Despite a market consensus for higher iron prices, mining companies are worried about the weakening of the US dollar,” Agnelli said.