Vale Cuts Iron Prices, Australian Dollar Falls

123jump.com Staff
16 Apr, 2009
New York City

CVRD cuts benchmark contract prices for Chinese steel mills by 30%. Australia based Leighton Holdings Ltd. scrapped plan through a joint venture to build a new terminal at Dubai airport for nearly $1.3 billion. Australian and New Zealand dollars declined after China reported weak economic growth.

[R]3:00AM New York, 7:00PM- CVRD cuts benchmark contract prices for Chinese steel mills by 30%. Australia based Leighton Holdings Ltd. scrapped its plan through a joint venture to build a new terminal at Dubai airport.[/R]

Australian stocks rose fractionally on hopes that the global economy will rebound but the currencies of Australia and New Zealand fell sharply after China reported slowest economic expansion in ten years.

In Sydney trading ASX 200 index gained 0.8% or 28.2 to 3,775.70. Australian dollar declined to 71.98 U.S. cents and New Zealand dollar fell 2% to 57.02 U.S. cents.

Of the ASX 200 index shares, 136 increased, 50 dropped, and 15 were unchanged. Kagara Ltd. led advancers in the index shares with a rise of 25.6% followed by Western Areas soaring 15%.

CVRD Cuts Contract Iron Ore Prices by 30%

Dow Jones Newswires reported today that Citigroup said in a research note that Brazil based Vale formerly known as Comphania Vale do Rio Doce is currently """"aggressively"""" selling iron ore at spot market prices to China.

CVRD is selling iron ore fines from its Carajas mine 30% below last year’s benchmark contract prices at between $70 and $75 a ton, and signing new long-term contracts with small and medium-sized mills.

Iron ore producers are presently engaged in negotiations with steelmakers for the annual iron price settlement from the contract year beginning April.

""""Chinese steel mills appear intent on a 40% to 50% cut in benchmark rates. Yet, we do not see the producers agreeing to lock in this type of cut for a full year. Thus, spot prices may become the dominant pricing mechanism in China for 2009,"""" said the report.

New Zealand Manufacturing Drops in March

Business New Zealand reported today that the BNZ Capital - Business NZ Performance of Manufacturing Index (PMI) stood at 40.7 in March from 38.9 in February, dropping for the 11 straight months.

A reading above 50 reflects expansion, while a measure below 50 indicates contraction.

However, some industry sub-groups showed an increase in March with machinery & equipment manufacturing 39.3, metal product manufacturing 40.0 and petroleum, coal, chemical & associated products 41.3.

Business NZ chief executive Phil O’Reilly said, “The first quarter of 2009 has shown to be considerably worse than previous years, and further months of contraction are expected given comments received from respondents.”

Gainers & Losers

Kagara Ltd. led advancers in the ASX 200 index shares with a rise of 25.6% followed by increases in Western Areas of 15%, in Murchison Metals of 13.9%, in Babcock & Brown of 13.1%, and Bradken of 11.7%.

Realty stocks gained. Valad Property soared 10.5% and Australand Property gained 7.6%.

Aquarius Platinum led decliners in the Nikkei 225 index shares with a fall of 11.7% followed by losses in Crane Group of 5.2%, in Pacific Brands of 4.4%, in St Barbara Ltd. of 4.3%, and Aquarius Platinum of 3.7%.

Energy stocks fell as crude oil prices shed 0.3% to $49.30 per barrel. Linc Energy shed 2.7% and Newscrest Mining fell 2.6%.