Aluminum ETF: Supply vs. Demand | ETF Trends

Right now, there are just a few ways to get exposure to aluminum via exchange traded products. They’re not physically-backed, however, and to some that spells opportunity.

A large aluminum producer announced they would supply this base metal if a sponsor was interested in creating an aluminum-backed ETF. Murray Coleman for Barron’s reports that analysts believe physical ETFs could lead to higher prices. And at current prices, a $2.5 billion ETF could account for about one-fifth of the world’s inventory. [Would-Be Aluminum ETF May Have a Supplier.]

Stuart for Ag Metal Miner says the aluminum market has shifted from a massive over-supply to a deficit, thanks to the closure of Chinese smelters and a general drop-off in global production. Consumption around the world, however, continues to rise.

global aluminum annual production has dropped by about a one million ton run rate equivalent this summer largely due to the closure of Chinese smelters. Capacity for more cutbacks is around as balance must be obtained. However, consumption has begun to rise on a global scale, and many see the creation of an aluminum-backed ETF as a means to have more of a price effect along with tighter supply.

For more stories about aluminum and the potential ETF, visit our aluminum category.

  • iPath DJ-AIG Aluminum ETN (NYSEArca: JJU)
  • iShares Dow Jones U.S. Basic Materials (NYSEArca: IYM): Gives a small amount of exposure to aluminum producers.

Tisha Guerrero contributed to this article.

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.