Baosteel, China's largest steel maker, said Friday it had agreed with BHP Billiton on a price increase of up to 96.5 percent for iron ore in 2008, nearly double that of 2007.

    The prices were to increase by 79.88 percent to 96.5 percent, respectively, depending on the category of iron ore, the company said in a statement on its website.

    "As an outcome of these negotiations, the iron ore prices for Newman Fine Ore and Yandi Fine Ore, increased by 79.88 percent, and the price for Newman Lump Ore increased by 96.5 percent relatively to 2007," said Baosteel in a web announcement.

    The price rise is in line with experts' predictions and followed the settlement between Baosteel and Australian miner Rio Tinto last week.

     Baosteel, which negotiated on behalf of China's steel industry, said on June 23 it agreed to a 79.88 percent price hike for Pilbara blend fines and Yandicoogina fines and a 96.5 percent price rise for Pilbara Blend Lump for the contract year starting on April 1.

     Baosteel agreed in February on a 65 percent price rise for iron ore from Brazilian miner Vale. Rio Tinto and BHP Billiton then demanded a "freight premium," claiming it costs less to ship iron ore from Australia to China.

     Marcus Randolph, BHP Billiton's chief executive for ferrous and coal, said in a web statement on Friday that, "We are happy to have been able to settle the prices announced today with one of our most important customers. We've been particularly pleased with the spirit in which both Baosteel and BHP Billiton undertook negotiations."

     The Australian miner's marketing president Tom Schutte said the company was now seeking to settle agreements with the remainder of its customers under existing long-term supply agreements both in China and other countries.

     Shanghai-based Umetal.com analyst Hu Kai told Xinhua on Friday the deal helped iron ore titans and large steel mills to retain the iron ore negotiation "common practices."

     He explained that one practice was that three global iron ore giants would set a same price rise margin that had been broken this year. The other convention was the iron ore producers would set a price on an annual long-term base that had remained.

     Zeng Jiesheng, an analyst of the domestic Mysteel Research Center, said on Friday that "long-term interests got the upper hand" as the upstream and downstream players in the steel industry endeavored to avoid the long-existing negotiation mechanism being smashed.

     BHP Billiton's iron ore export volume accounted for about 17 percent of China's total, much less than Rio Tinto.

     The two Australian mining groups exported about 40 percent of the country's total iron ore imports last year.

     Hu said the country's export of steel products kept increasing in recent months. China exported 5.56 million tonnes of steel products, up more than 16 percent month on month.

     He said if this situation remained, the country would possibly again raise the steel product export duties.

     China raised the export duty for steel products at the end of last year. This included a 10 percent rise to the 25 percent export duty on steel billet, and a 5 percent increase to the 15 percent export on steel wire and bar products to reduce steel product exports.

     According to Liu Yuan, another analyst of the Mysteel Research Center, domestic steel prices witnessed a general decline in June, while prices on foreign markets were still firm. The price difference kept rising and ocean freight went down significantly. As a result, China's steel export volume was expected to keep growing in the following months.

      Hu predicted if the export duty were to be raised, many export-targeted iron products would flow back to the domestic market and would help to maintain the domestic steel product price level.

      The world's top steel producer manufactured a combined 69.08 million tonnes of steel products last year, up 45 percent year on year. About 14.7 percent was export-oriented, much higher than the 10 percent line set by the government.

      Baosteel shares lost 1.29 percent to 8.39 yuan on Friday. BHP Billiton shares rose by more than 2 percent to 40.7 Australian dollars (39.15 U.S. dollars) on Friday.