Copper prices have hit their highest prices in six months, giving related exchange traded notes (ETNs) and exchange traded funds (ETFs) some steam. Why is copper the metal of the moment?

  • Falling supplies. Inventories in warehouses monitored by the Shanghai Futures Exchange dropped 18% to their lowest point since early February, reports Reuters.
  • China. They’re the world’s largest copper consumer. Excitement over the country’s $585 billion stimulus plan and its potential to spur industrial production has many optimistic about the future outlook for the metal, which is a major component in industrial production.
  • Increased lending. New loans in China increased more than sixfold in March from a year ago. There’s speculation that increased lending will spur inflation, making copper more attractive as a hedge.
  • More shipments. Inbound shipments of the metal to China jumped 14% in March from February as buyers take advantage of low prices.
  • iPath DJ AIG Copper TR Sub-Index ETN (JJC): up 49% year-to-date

  • iShares MSCI Chile (ECH): up 21.2% year-to-date; copper makes up 50% of Chile’s total exports

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.