* Japan not looking to buy from cheaper spot market
* JFE, Sumitomo: not received offers to cut Q4 iron ore prices
TOKYO Oct 25 (Reuters) - Japanese steelmakers JFE Holdings Inc and Sumitomo Metal Industries Ltd on Tuesday said they would not cancel their October-December iron ore contracts despite a plunge in spot market prices.
As spot prices fell to their lowest in 12 months, Chinese steel mills were seeking to postpone iron ore shipments or renegotiate fourth-quarter contracts, traders said, while top producer Vale said it was open to discussing a different pricing system with clients.
"It is against our creed that we break contracts and shift to spot buying when the market is not good. We believe that raw materials costs should remain stable," Eiji Hayashida, chairman of the Japan Iron and Steel Federation, told a news conference.
JFE had not received an offer from miners to reduce the October-December iron ore price, Hayashida added.
"We'll stick to purchasing contracts irrespective of the ups and downs of the spot market," an official at Sumitomo Metal Industries told Reuters.
Weaker demand for steel in China, the world's biggest consumer and producer, has dragged down steel prices <0#SRB:> and slashed the appetite for iron ore, the key raw material for the industry.
Under the quarterly contract system created last year, iron ore in the fourth-quarter will be priced at more than $175 a tonne, much higher than the current spot market rate of around $142. .IO62-CNI=SI
Hayashida said global financial woes and floods in Thailand may reduce Japan's crude steel output in April 2011-March 2012 by 1 million tonnes to below 108 million tonnes.
Thailand's worst flooding in five decades forced Toyota Motor Corp to suspend production through Oct. 28 due to supply disruptions. Japan's biggest automaker said it had lost production of 37,500 vehicles since output was halted on Oct. 10.
Thailand is Japan's third-biggest export market for steel, followed by South Korea and China, accounting for 11 percent of Japan's steel exports in January-August.