The Metal Bulletin Iron Ore Index will soon be offered on a daily basis to give up-to-date benchmark prices for iron ore, in response to booming volumes of iron ore traded on China's spot market, the company said in a release dated Monday.

"The spot market into China for iron ore has rapidly matured and has now become the market mechanism of choice for most industry participants, superseding the benchmark system. China consumes almost half of the world's output of iron ore, and is the only significant spot market in the world," said MBIO Director Cameron Hunt.

Metal Bulletin's daily index will provide an accurate and up-to-date benchmark to clear iron ore swaps and physical pricing. It will also still publish its weekly index.

"Metal Bulletin's methodology has proved itself in creating the most accurate reflection of the physical spot market into China. This is the only index with a methodology specifically designed to minimize unfair market influence," said Hunt.

The announcement marks another step away from the traditional benchmark system that up until now has been set annually following often long and opaque talks between the three iron ore majors and key consumers Japan and China.

This year in particular, BHP Billiton Ltd. (BHP), Comphania Vale do Rio Doce (VALE) and Rio Tinto Ltd. (RTP) have stepped up spot market sales as customers defer contracted shipments.

A settlement is often reached before the start of April, the start of the Japanese financial year, though talks can drag on longer. This year, negotiating parties still appear a long way from forging an agreement, and some analysts have suggested the benchmark system may end as early as the current round of talks.

BHP Chief Executive Marius Kloppers at a recent conference said the benchmark was "practically dead. Prices for this trade should not be settled mysteriously in a dark, smoke-filled room somewhere."

-By Elisabeth Behrmann, Dow Jones Newswires;

61-2-8272-4689 elisabeth.behrmann@dowjones.com