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    BEIJING, Feb 17 (Reuters) - Japan's Nippon Steel <5401.T> has agreed to a 65 percent rise in the price it will pay for iron ore under term contracts, effective April 1, industry sources and a Chinese steel industry website said on Sunday.

    Term iron ore prices had been widely expected to rise by 50 percent or more, after spot prices soared to record highs in 2007 and Chinese steel mills' demand showed no signs of abating.

    "An international steel mill has concluded 2008 iron ore negotiations. The 2008 iron ore price will rise by 65 percent," steel industry website Umetal said late on Sunday.

    Traditionally, all steel mills accept whatever price is first settled by any steel mill and one of the three top miners, Brazil's Vale or Australia's Rio Tinto (RIO.AX

    Li Xinchuang, vice president of the China Metallurgical Industry Planning and Research Institute, confirmed a price had been set but did not confirm which companies nor what price level.

    A deal would be announced this week, Chen Xianwen, deputy general director of the China Iron and Steel Association, said on Sunday, while also declining to confirm the price or parties to the deal.

    When asked if Chinese mills would accept a price settled by their Japanese counterparts, Chen said they would. "That's how the system works."

    "We had expected 50 percent, but that was a conservative estimate. A 65 percent rise is very reasonable," said analyst Henry Liu of Macquarie Research.
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