PERTH (miningweekly.com) – Diversified giant BHP Billiton has reached an agreement with most of its customers to move away from annually priced iron-ore contracts to short-term contracts, the company reported on Tuesday.

BHP Billiton, which had been vocal about wanting to move to shorter-term contracts across all its bulk commodities, said in a statement that the settlements with a significant number of Asian customers represented a “structural change” that was consistent withstone gold international machinery corp the company achieving market-clearing prices.

In early March, BHP Billiton CEO Marius Kloppers announced that the group had agreed shorter-tstone cheap gold dredges saleerm market-based pricing for its hard coking coal with customers in Europe, China, India and Japan.

Stock Resources industry analyst Grant Craighead told Mining Wstone gold mine for sale waleseekly Online that the move to shorter-term pricing contracts was not a surprise to the market.

“Vale has been taking the lead in the current negotiations, and it is rumoured to be close to closing. BHP has also been pushing for a year to two for a shift away from the annual pricing to a three-month based contract, to better reflect the short-term pricing movements of iron-ore, which in recent years, have been quite dramatic at times.”

Craighead said that the shorter-term contracts circumvented the risk of mispricing in the market, where one party, either the buyer or the supplier, could take advantage of dramatic shifts in the spot prices, away from the contract prices during any annual period.

“The short-term pricing, I believe, creates a more transparent reflection of iron-ore pricing, which in the long run should be beneficial for both suppliers and customers.”

He noted that while some regions might be more resistant to implementing the short-term pricing contracts, there was a definite strong shift in that direction.

“I think many contracts will move to this, including the Chinese.”