PM Bolt On: FX QE ECB KMR...Boron (not boring), what a steal!

Good Evening,

The ECB QE announcement was and did benefit the market (some quality) and dragged up some of the dross as well. Gold attempted to anchor in at $1310/Oz. and failed miserably (for now), with a good % of the Au market cashing in some very stale positions the market will look for further direction. Already the bulls are predicting $2k/oz. again! The Copper malaise continued ignoring anything QE, in fact shrugging the news off and dropping a cent or four to $2.57/lb circa $5665.87/t. 

The common-sense trades were FX movements and its now over to the market to eke out the beneficiaries of the ECB QE. With earnings under pressure from lower commodities, factory gate and exports, the jury for the ECB to cure the EU woes is out (myself included). 

Is it time for China to dump steel into the EU to suppress prices for longer and deflate consumer prices. This steel will of course be boron free (read as Tax Rebate) but there are limited alternatives with the Chinese market being awash with it. The surplus with the addition of boron (whether it was or not is another question) had previously made steel a competitive export (even for the poor performing mills) because of the 9% boron steel tax rebate that has now been cancelled. 

Russia has the potential to take up this strain from China, with the need for FX/Earnings Russia has been given the best headwind to obtain market share in hot-rolled steel exports. Russia has a weak Ruble () and Chinese contraction in steel exports in the short-term, Russian steel could be on to a winner! Evraz? OAO Novolipetsk Steel? Severstal? One wouldn't want to be holding the Indian equivalents, Tata’s costs are already difficult to manage, no market Europe for Russia? Nevermind India will do. Indian producers may become more bullish if the $1:56, where pricing will impact on Russian exports to India. .

The Chinese steel exports may contract in the short term, but Europe may find themselves the beneficiary of some cheap steel from China! With iron ore having plummeted and searching for a balance in pricing, steel prices declining 14%, if the two continue for much longer both steel and iron ore production may go into decline as well.

KMR (Kenmare Resources) proved the perfect trade today with the traders hearing the gossip of negotiations nearing an end that will give some assurances to any offer Iluka Resources wish to make (or not). KMR, as I've stated for a while at circa 2 pence becomes the pure down side protected/limited trade long. 

There's some loose gossip that Iluka Resources are not interested in to too many of the current senior management. How reliable this is is another matter and untested, but severance might be a stumbling block, could it go hostile? I doubt it as the creditors want more clarity on repayment and return on 'investment'. Iluka Resources as the larger entity will provide this if combined. With the chatter of 12 pence, it's certainly not for the faint-hearted 

Atb Fraser