SINOSTEEL Corp, China's second-biggest iron-ore trading company, expects the contract price for the steel-making ingredient to gain 25 percent next year, driven by increased demand, a company executive said yesterday.

"China's demand is unstoppable," Wang Hongsen, managing director at the company's Indian unit, said yesterday in New Delhi. Wang had forecast a five-percent price gain in May. "Supply continues to lag demand," Wang said.

Mining companies, including BHP Billiton Ltd, the world's largest, and their customers begin annual contract talks this month to settle the price of ore shipments from April.

Wang's forecast is less than the 30-percent gain in the price estimated in a Bloomberg News survey of eight analysts last month.

Rising demand from China, the world's largest steel user, has pushed iron ore prices to a record for five years. India is the second-biggest supplier of the ore to China, providing a quarter of total imports.

"Demand is so strong that we have seen prices rise sharply in the spot market," S.B. Chauhan, an adviser to the Federation of Indian Mineral Industries, said from New Delhi. "Buyers are willing to pay a premium to lock in supplies."

Spot prices, which are determined on a single-cargo basis, have reached US$185 a ton, according to Credit Suisse Group on September 28. That compares with the 2007 benchmark Australian price for long-term contracts of US$51.47 a ton.