Copper-related exchange traded funds could strengthen this year as big banks turn bullish on the base metal in anticipation of tightening supply ahead.

Year-to-date, the United States Copper Index Fund (NYSEARCA: CPER) gained 5.4% and iPath Series B Bloomberg Copper Subindex Total Return ETN (NYSEArca: JJC) rose 5.6%.

Morgan Stanley projected copper prices could increase 14% in 2019 due to a supply-driven deficit by the year end, the Financial Times reports.

“A year of weak grades at major operating mines more than offsets limited growth from green and brownfield projects, resulting in shrinking total mine production through 2019,” the bank said in its report “Copper: the stars are aligned”.

“Demand growth should slow versus 2018, but anything above 0 per cent is sufficient to tighten the market, jolting it from its finely balanced state into outright deficit,” Morgan Stanley analysts added.

Copper prices have been stuck range bound for the past six months on demand concerns in the wake of a slowing global economy and escalating U.S.-China trade war.

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