Renewed Iron Ore Price Worries in Australia

Marcus Jacob
14 Apr, 2015
New York City

Australian Treasurer Joe Hockey said national finances may be affected if iron ore prices continue decline. The price of the iron ore has plunged 60% in the last one year as the four largest mining companies continue to increase supply and China engineers a slowdown.

[R]5:30 PM Sydney – Australian Treasurer Joe Hockey said national finances may be affected if iron ore prices continue decline. The price of the iron ore has plunged 60% in the last one year as the four largest mining companies continue to increase supply and China engineers a slowdown.[/R]

Australian stocks traded lower and Aussie dollar struggled to gain higher ground after renewed worries on the direction of iron ore prices.

Australia’s Treasurer Joe Hockey said iron prices could dip to as low as US$35 a ton and there seems to be “no floor to the price.”

Separately, U.S.-based rating agency Standard & Poor’s placed largest eight iron ore mining companies on a credit watch list with “negative outlook.”

As usual, rating agency lagged the market move and iron ore price has plunged 60% in the last twelve months to drop to a decade-low to $47.08 this month.

The rating agency, lowered its price estimate for iron ore for the rest of the year to US$45 a ton from its previous outlook and lowered to US$50 a ton in 2016 from the previous estimate of US$65 a ton.

Seasonally adjusted housing finance for owner occupied homes in February jumped 0.5% to $18.345 billion from $18.246 billion in January, the Australian Bureau of Statistics said.

The department said loans for personal finance in February dropped 0.2% to $8.747 billion from January and loans for commercial finance declined 1% to $43.549 billion from $43.967 billion in January while lease finance in the month climbed 4.1% to $423 million from last month.

Australian dollar closed at 75.81 U.S. cents and in stock trading turnover rose to 587 million shares worth $4.4 billion.

At close, the ASX 200 Index fell 13.70 or 0.2% to 5,946.60 and the broader All Ordinaries Index slid 11.90 to 5,916.20.

In commodities trading, gold declined US$10 to US$1,195 an ounce and Brent crude edged up 0.11 cents to close at US$58.04 a barrel.

Australian Stock Movers

Shopping Centres Australasia Property Group Re Limited rose 0.5% to $2.13 after the real estate developer agreed to acquire the Whitsunday Shopping Centre, Airlie Beach, Queensland from the private investor group for about $46.98 million.

Transurban Group gained 1.3% to $9.93 after the toll road operator reported toll revenue surged 69.6% to $376 million.

The company said proportional revenues from Sydney segment surged 21.7% to $165.6 million, from Melbourne soared 9.6% to $143 million and from Brisbane climbed 7.2% to $60.4 million.

Vmoto Limited surged 23.1% to 0.048 cents after the scooter manufacturer forecasted revenues for the year ending in December 2015 to exceed to $69 million from China and overseas markets and net profit in the range of $5 million to $7 million.