The iPath Bloomberg Copper Subindex Total Return ETN (NYSEArca: JJC) is awakening from a lengthy slumber.
Thanks to a gain of almost 2% over the past month, the widely followed copper exchange traded note (ETN) is higher by more than 3% year-to-date and some data points indicate the red metal can continue grinding higher.
Industrial metals like copper, nickel, iron and steel have all rebounded in recent months as traders bet on improving global economic conditions would bolster demand for the base metals after prices hit multi-year lows.
Industrial metals producers have been trimmed the fat, cutting production and increasing efficiency to support prices. Additionally, any further delays in a Federal Reserve rate hike would help keep pressure on the dollar and support metal prices.
Other data points support the thesis that copper and JJC could potentially deliver more near-term upside. On Tuesday, copper for December rose thanks to encouraging Chinese economic data.
“Chinese manufacturing data comfortably beat expectations in October with the Caixin manufacturing PMI rising to its highest in more than two years at 51.2 (a reading above 50 indicates improving operating conditions),” reports Frik Els for Mining.com.[related_stories]
Many industrial metals and miners rallied on the belief that China would support growth through stimulus measures, augmenting demand for metals while enticing investors to jump back in. Moreover, the depreciating U.S. dollar made USD-denominated resources cheaper for foreign buyers. The ongoing global low-yield environment also pushed investors toward more attractive assets, like commodities.
That makes JJC’s recent strength all the more notable because ETN is moving higher as the dollar does the same.
“While other industrial metals and steelmaking raw materials have jumped in value this year, the bellwether metal has advanced a modest 4% this year. The copper price hit six year lows in January following a 26% decline in 2015,” reports Mining.com.
For more information on the copper market, visit our copper category.
iPath Bloomberg Copper Subindex Total Return ETN
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.