Yet another investment bank is trying to muscle into the base metals ETF space, this time with a proposal to introduce physically backed copper, aluminum, zinc and nickel ETFs in Europe.
Swiss and Global Asset Management (AUM) wants to release these bad boys, since ETF Securities did it back in 2010 and 2011, but JPMorgan and BlackRock’s offerings are still pending.
According to Reuters’ Andy Home, “the financial attractiveness and marketing scope of physical base metal ETFs…could be bad news for those in the metals industry who view a physical ETF as an inherently bad thing.”
However, even though copper ETFs have been the most popular of the physically backed base metal ETFs due to the red metal’s attractiveness to investors, even these new products may not affect metal buyers as much as we think. For example, Home cites that ETF Securities’ copper ETF’s “maximum size in terms of metal held has been just 6,900 tonnes (in March this year). After a clear-out on June 24, coinciding with London Metal Exchange copper’s slide to an 18-month low, it now holds just 3,950 tonnes.”
To boot, with high storage fees that come with the physically backed ETF products, this market movement shouldn’t upend metal buyers’ activity too significantly in the near to medium term.
Today’s Copper Prices
On Tuesday, July 9, the day’s biggest mover was the price of Chinese bright copper scrap, which saw a 5.4 percent decline. The price of Chinese copper wire rose 0.6 percent after a two-day drop. Following a 0.5 percent rise on Tuesday, the price of Chinese copper bar closed lower. The cash price of Chinese copper is back up, rising by 0.5 percent yesterday.
The Japanese copper cash price prices declined 1.2 percent. For the fifth day since Wednesday, July 3, the drop-off has accelerated. The price of US copper producer grade 122 gained 1.1 percent. The price of US copper producer grade 110 rose 1.1 percent. The price of US copper producer grade 102 inched up 1.0 percent.
On the LME, the 3-month price of copper declined 0.9 percent to $6,778 per metric ton. The primary copper cash price saw a 0.8 percent decline on the LME to $6,765 per metric ton.