Iron Ore Prices Drop 8% in April as China Curbs Lending

Marcus Jacob
29 Apr, 2014
New York City

Iron ore prices extended decline by 2% in China and dropped 8% in the month and fell 17% in the year so far. Chinese banks also tightened the lending conditions for ore purchase as inventories shot up 25% to 110 million tons. Resource stocks led the market decliners in Sydney trading.

[R]5:00 PM Sydney – Iron ore prices extended decline by 2% in China and dropped 8% in the month and fell 17% in the year so far. Chinese banks also tightened the lending conditions for ore purchase as inventories shot up 25% to 110 million tons. Resource stocks led the market decliners in Sydney trading.[/R]

Australian market indexes dropped after a decline in iron ore price in China and extended monthly loss to 8%.

Resource and banking sector stocks led the decliners.

Iron ore prices on Monday fell 2.2% in Shanghai trading and import price of 62% iron ore fines in China’s Tianjin port closed at $108.60 per ton. Inventories at Chinese ports have surged to 25% totalling 110 million tons.

Also, nearly 40% of ore is used as a collateral for short-term financing and local reports in China suggested that banks raised the cost of financing for the purchase of ore.

Iron ore prices have plunged 17% in the year so far.

Australian dollar closed at 92.41 U.S. cents and stock market trading turnover climbed to 819 million shares worth $5.37 billion.

The ASX 200 index dropped 49.50 or 0.9% to 5,486.60 and the broader All Ordinaries slumped 49.20 to 5,466.90.

Stocks in Review

Rio Tinto slipped 76 cents to $61.30. BHP fell 26 cents to $37.61. Woodside Petroleum Limited slid 0.9% to $40.71.

Westpac Banking Corp decreased 47 cents to $35.39.

AWE Limited closed unchanged at $1.59 after the energy company reported revenue in the third-quarter ending in March climbed 21% to $268 million from a year ago.

The company has net cash of $72 million during the period and un-drawn debt facilities of $300 million.

Cash Converters International Ltd surged 6.3% to $1.10 after the second hand goods retailers said revenue in the third-quarter ending in March soared 29.4% to $85.3 million from $65.9 million a year ago period.

The retailer said in a statement net income declined to $7.22 million from $9.86 million in second-quarter ending in December.

Horizon Oil Ltd declined 4% to 35.5 cents after the oil and gas explorer agreed to merger with Roc Oil Company Ltd to establish a single Asia-focused energy company worth $800 million.

After the merger, Horizon shareholders will receive 0.724 Roc shares for each share held and will own about 58% of the merged company.

Wesfarmers Ltd dropped 2% to $43.01 after the department stores operator said total sales at Coles business segment in the third-quarter ending in March jumped 3.6% to $8.64 billion from $8.34 billion a year ago. Comparable food and liquor store sales increased 3.5%.

The retailer added Bunnings segment revenue climbed 12.3% and revenues from Officeworks segment jumped 6.7%. Target revenue dropped 3.6% and Kmart’s total sales fell 0.4%.