Up more than 26% year-to-date, the iPath Bloomberg Copper Subindex Total Return ETN (NYSEArca: JJC) is one of this year’s best-performing commodities exchange traded products. Some commodities market observers believe the red metal can continue surging.
“I think the fundamentals on copper medium to longer term look very supportive,” Vertical Research Partners’ Michael Dudas said in an interview with CNBC. “The fundamental outlook for copper from a supply and demand basis looks positive.”
A near-term issue for copper is the ability of the Trump Administration to get its ambitious infrastructure efforts off the ground, something many market observers believe will not happen until next year. Additionally, if that effort does not approach the $1 trillion in expenditures promised by the president on the campaign trail, markets could be disappointed.
JJC is an exchange traded note (ETN), not an exchange traded fund (ETF). Similar to index-based exchange traded funds, ETNs also track some sort of index as part of their investment strategy. However, an exchange traded note, like the name implies, is a type of debt note that trades on an exchange. Additionally, the underwriting bank that issues ETN shares may choose to stop share creations.
Copper currently trades around three-year highs due in part to better-than-expected global demand and outperforming economies around the world. The Global X Copper Miners ETF (NYSEARCA: COPX) is also surging on the back of copper’s ascent.
Related: Copper ETNs Are Racing Higher Again
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. COPX, which tracks the Solactive Global Copper Miners Index, is up nearly 32% year-to-date.
In recent years, copper producers have been paring production, which could create tighter supply as demand rebounds. That would further boost prices.
Dudas’s “latest prediction takes into account that there could be a minor pullback in the coming months. But Dudas said any near-term softness in copper prices is a buying opportunity,” according to CNBC.
For more information on Copper ETFs, visit our Copper category.