3 Red Hot Base Metal ETFs

 | Aug 21, 2017 05:04AM ET

Metals are riding high on favorable demand-supply dynamics and a subdued greenback. Powershares DB US Dollar Index Bullish Fund all Industrial Metals ETFs here).

iPath Pure Beta Aluminum ETN (SI:FOIL)

Aluminum prices crossed over $2,000 a metric ton for the July end may have cause the spike.

As per the source, the Shandong province announced that it would ask aluminum producers that fall short of emissions standards to suspend operations. As a result, the possibility of an output crunch led to a boost in prices.

This product looks to limit the impact of contango while also providing collateralized returns from U.S. T-Bills.

United States Copper Index Fund CPER

Copper price jumped to a 32-month high on bullish Jefferies indicated that prices may remain erratic in the near term and rise to $2.75/lb in 2018 and $3/lb in 2019 from the current $2.87/lb. Jefferies even sees the possibility of a $4/lb or above pricing in copper in the next five years.

China's manufacturing activity growth picked up in July as output and new orders grew at the quickest rate in five months, as per IHS Markit . Since the country is the world’s biggest consumer of this industrial metal, making up roughly 40% of the global copper demand, the uptick in Chinese manufacturing bodes well for copper demand.

As per a source , some outages including a 43-day strike at BHP's Escondida mine in Chile which was called off in March and the ongoing strike at Freeport McMoRan's Grasberg operations in Indonesia have supported prices.

The underlying index of the fund is designed to be an investment benchmark for copper as an asset class. The index is composed of copper futures contracts on the COMEX exchange. The index looks to maximize backwardation and minimize contango while utilizing contracts in liquid portions of the futures curve.

iPath Pure Beta Nickel ETN NINI

Nickel prices have rallied in the last one month. The recent resurgence in prices was due to bargain hunting as the metal touched an Philippines GDP Up In Q2: ETFs in Focus ).

The note looks to reflect the returns that are available through an investment in the futures contracts in the nickel markets. The index consists of a single futures contract but has a unique roll structure which selects contracts using the Pure Beta Series 2 Methodology. This strategy looks to limit the impact of contango while also providing the collateralized returns from U.S. T-Bills.