Commodities

New Copper ETFs Are In Demand

Copper ETFs are set to be the next big thing in commodities trading. Latest estimate says that China will triple its consumption of copper to 20 million tons by 2020. China will account for 49% of world copper sales by then. With ETFs getting active, copper price is going to be bullish in the coming months. Base metals analysts have predicted that copper price might rise by 50% to $12,000 a metric ton in the next 12 months.

Goldman Sachs, JP Morgan, Deutsche Bank, and BlackRock are leading investors behind new Copper ETFs that would trade on leading stock exchanges like NYSE, while investors derive prices from LME copper index and comex copper futures.

There are already a few Copper ETFs listed across exchanges in the USA, like:

  • First Trust ISE Global Copper (NASDAQ: CU)
  • Global X Copper Miners ETF (NYSEArca: COPX)
  • iPath DJ-UBS Copper (NYSEArca: JJC)

Several ETFs backed by physical copper are hitting the global markets these days. Copper-backed ETFs have turned out to be the big commodities news recently as many analysts have predicted that they would become bigger than Gold ETFs (the biggest ETFs in the world currently).

JPMorgan Chase recently traded $1.5 billion in copper on the London Mercantile Exchange (LME). JPMorgan has filed an application with the US SEC for a physically backed Copper ETF which, if fully taken up, would result in a holding of 61,800 tonnes of copper metal stored in the bank’s Henry Bath warehouses. JP Morgan’s ownership of Henry Bath warehouses was viewed as a key element in the launch of its fund as the cost for storing copper would be low.

BlackRock also wants to launch a physically backed Copper ETF. It plans to issue up to 12,120,000 shares. The metal will be stored in London Metal Exchange-registered warehouses owned by Metro International Trade Services LLC. BlackRock’s initial unit of the iShares Copper Trust Fund will consist of 2,500 shares, called a basket, backed by 25 tonnes of copper. One share would equal 10 kilos of copper (22.0462 lbs) but Black Rock intends that only “baskets” are tradable.

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