Japan’s leading steelmakers have agreed to a 96.5 per cent increase for iron ore from Rio Tinto.

Reports have said BHP Billiton is likely to offer similar prices. The steel makers fell in line with the massive price hikes accepted last week by China’s Baosteel for Australian iron ore.

BHP has yet to settle on prices with Chinese steel makers.

However, the chief executive of BHP’s ferrous metal and coal business, Marcus Randolph, said a settlement on similar terms to those reached by Rio Tinto is likely.

The 2008 contract prices will be back-dated to April 1 as soon as BHP comes to an agreement with Chinese iron ore buyers.

In a presentation last week, Mr Randolph indicated that BHP will be seeking to determine future contracts on a long-term basis, with prices more reflective of spot market rates, rather than be reached by negotiation.

In the same presentation he said BHP’s Western Australia ore estimates have been increased by 23 per cent, with the company’s iron ore capacity tipped to triple between now and 2015.