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Market Update

Ion Ore Price at 6-Year Low, Australian Indexes Extend Losses


Author: Marcus Jacob
ticker.com
Last Update: 11:32 AM ET March 30 2015

5:30 PM Sydney – Australian market indexes extended losses of last week as iron ore price hit six-year low and gold and oil prices headed lower. PanAust received a substantially lowered offer from a China based investor.

Australian market indexes declined following another round of selloff in commodities markets and iron ore price in China dropped to a six-year low.

The iron ore price for delivery to China declined 4% in Friday’s trading to US$53.14 a ton, according to data tracked by Metal Bulletin.

The iron price has dropped 60% from its peak price in 2014 of US$135 and more than 70% from its record high of US$192 ton.

Prices of iron ore continue to slide as China slows economic growth and construction sector struggles with the falling home prices. Sales of home and prices declined in 66 of 70 metropolitan areas in China in February.

And, housing market represents 24% of steel consumption. Steel prices have declined for the fifth week in a row.

BHP Billiton and Rio Tinto are for now buffeted from the falling iron ore price with operating cost near US$35 a ton but Fortescue Metals may face additional financial pressure with the prices nearing US$50 a ton.

Australian dollar closed at 77.18 U.S. cents and in stock trading turnover jumped to 878 million shares worth $9.9 billion.

ASX 200 Index declined 73.80 or 1.3% to 5,846.10 and broader All Ordinaries Index dropped 72.60 to 5,816.30.

In commodities trading, gold slumped US$9 to US$1,194 an ounce and Brent crude slipped 91 cents to close at US$55.50 a barrel.

Australian Stock Movers

Caltex Australia Limited plunged 9.1% to $34.44 after the U.S.-based Chevron divested its 50% stake in the refiner for about $4.7 billion.

PanAust Limited surged 40% to $1.72 after the mining company''s China-based major shareholder Guangdong Rising Assets Management made an unconditional offer to acquire the company for $1.71 per share or $1.1 billion, substantially lower than the $2.30 a share offer less than the 10 months ago.

Origin Energy Ltd declined 4.4% to $11.20 after the energy company was ordered by a federal court to pay $2 million in fines for illegal sales tactics and fined $325,000 to its marketing company SalesForce after the court found “unconscionable conduct, undue harassment and false and misleading representations.”

Slater & Gordon Limited closed unchanged at $7.55 after the law-firm agreed to acquire a unit of U.K.-based technology and outsourcing company Quindell Plc for about $1.2 billion or £637 million.

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