UPDATE 1-Thyssenkrupp agrees to doubling iron ore price

(Updates throughout)

FRANKFURT/LONDON, April 22 (Reuters) - Germany's largest steelmaker Thyssenkrupp (TKAG.DE) on Thursday became the first European steel producer to announce that it has struck an iron ore supply deal on a quarterly basis.

Depending on quality, prices for key steelmaking ingredient in Thyssenkrupp's supply deals will reflect a rise of up to more than 100 percent, the company said.

The world's top three iron ore miners -- Brazil's Vale (VALE5.SA), BHP Billiton (BLT.L) and Rio Tinto (RIO.L) -- have been pushing to banish a decades-old annual benchmark pricing system in favour of a more flexible mechanism.

European steelmakers such as Thyssenkrupp itself as well as Voestalpine (VOES.VI) have been resistant to change, saying that they would prefer to keep the annual benchmark system. [ID:nLDE62T0X0] [ID:nLDE6381B7]

Thyssenkrupp said it struck an agreement with Vale, which would be valid for the quarter starting on April 1. It was not clear immediately whether the company would be negotiating with the miners every quarter.

"It looks like the move to quarterly pricing is happening," analyst Gavin Wood at Nomura said. "Looks like they're accepting that in the short term. I'm sure that they're still negotiating and they would like to still try and negotiate something on a longer term basis," he said.

Analysts had said a move to quarterly pricing could make life particularly difficult for Thyssenkrupp, whose contracts are primarily on a long-term basis. The company is fully reliant on ore purchases.

The company said on Thursday that it expects further iron ore price increases and aims to pass on higher costs to the customer, resulting in an increase in steel prices from July.

Earlier it said the price increases were putting Germany's industry at risk. "There is no recognisable economic reason for these price demands," ThyssenKrupp Steel Europe said on Thursday.

A Brazilian newspaper reported on Thursday that Vale has completed iron ore contracts with all of its clients. [ID:nN22212891]

For a story on steelmakers' options as iron ore pricing moves to quarterly, click on: [ID:nLDE63E0WU]

(Reporting by Humeyra Pamuk in LONDON and Tom Kaeckenhoff in FRANKFURT, Editing by William Hardy)