Not only was the iron-ore benchmark pricing system coming apart at the seams, but it has “lost a pants leg”, as the market moved towards more transparent prices, BHP Billiton CEO Marius Kloppers said on Monday.

Further, he said that the movement towards the steelmaking ingredient becoming a traded product was now irreversible.

Kloppers reiterated that BHP Billtion regarded itself as a volume supplier and a price taker, which aimed to “get today’s price today”, and if today’s price was unknown “please try and create something that shows what today’s price is”.

He said that one of the next developments in the iron-ore market would be similar to what happened in the steam-coal market, which shifted from a benchmark pricing system to a physically traded market, adding that there was “great interest” in this.

“I think that over the next couple of periods, we will see a greater transparency in physical markets developing to augment the traded market,” commented Kloppers. “And it think those two things need to come together to really give us accurate price discovery going forward.”

BHP Billiton stood to benefit from a spot iron-ore market, as the majority of its mines were strategically located in the Pilbara region of Australia, close to the key Asian markets, while competitors had strong presences in South America.

“As we’ve said before, we would not like to sign any new term iron-ore contracts based on traditional benchmark systems,” Kloppers said.

“I do think the fact that there is now a plethora of so-called benchmark prices, basically [confirms] our prediction over the last couple of years that the benchmark system is coming apart at the seams – we’ve sort of lost a pant leg now.

“And I think the situation is largely irreversible from here on forward,” he argued.

Kloppers said that supporting this was the fact that the iron-ore market was now so big, with a vast amount of customers.

BHP Billiton earlier this year secured a near-100% increase in its iron-ore prices for Chinese customers.

Prices for the bulk commodity were currently calculated according to a benchmarking system, and were subject to lengthy discussions, which often took months to concluded.