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Market Update

Australia Lowers Iron Ore Price Oulook by 33%, Third Downward Revision

Author: Marcus Jacob
Last Update: 11:24 AM ET December 22 2014

5:30 PM Sydney – Australian stocks staged a rebound after crude oil prices advanced. Australia lowered its iron ore price for exports by 33% in 2015, third downward revision in the year. Fairfax announced to merge its radio station with Macquarie Radio Network.

Australian stocks rebounded after losing 5% in the last three trading days and crude oil price advanced.

However, investors took in stride the latest outlook for iron ore exports in 2015.

Australia’s iron ore export price is expected to dip to $63 a metric ton compared to the previous government forecast of $94 a ton, the Department of Industry said in a report today.

Iron ore prices this year have averaged $88 a ton, and the price of the ore with 62% content and free-on-board has dropped 49% in 2014.

China, the largest buyer of Australian iron ore, has been slowing down its economy and the demand is expected to weaken further from the second-largest economy in the world.

The government had earlier estimated price of the iron ore at $103 a ton in March and lowered its estimate to $97 a ton in June before the third revision today.

The report also estimated iron ore shipment to decline to $176 billion in the year to June from the previous estimate of $192.4 billion.

Australian dollar closed at 81.67 U.S. cents and in stock-trading turnover declined to 814 million shares worth $4.4 billion.

ASX 200 Index climbed 103.40 or 1.9% to 5,442 and broader All Ordinaries Index jumped 101.40 or 1.9% to 5,414.10.

In commodities trading, gold was flat at US$1,198 an ounce and light crude oil jumped $2.77 to US$57.13 a barrel.

Australian Stock Movers

Austal Limited jumped 2.1% to $1.47 after the aluminum vessels maker received order for about $14.4 million to modify the Littoral Combat Ship program.

Fairfax Media Limited gained 1.8% to 84.5 cents after the radio broadcasting company agreed to two deals to sell its radio assets for $96 million.

Under the one agreement, Fairfax received about $18 million in cash and a 54.5% stake in the expanded radio company after merging Fairfax Radio Network in to the Macquarie Radio Network.

Separately, Fairfax also agreed to sell its Perth-based 96FM to APN News and Media Limited for $78 million.

Shopping Centres Australasia Property Group Re Limited climbed 2.9% to $1.93 after the real estate investment company signed an agreement for $48 million to acquire shopping centre in the south west of Sydney’s CBD.

Telstra Corporation Ltd increased 1.9% to $6 after the telecommunication service provider secured planning & design contract worth about $390 million from the National Broadband Network.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc