Back to top

ETF News And Commentary

Base metal ETFs have been chronically weak performers for much of 2013. The combination of a strong dollar, sluggish manufacturing figures, and a slumping China have pushed products like copper sharply lower since the start of the year.

However, Friday marked a huge reversal for the space, as many metals in the segment saw banner days. In fact, the space led the commodity world to close out the week, with gains of nearly 6.6% seen in the spot copper market.

Behind the Copper Price Surge

The story of copper’s turnaround in the past few hours was really a global phenomenon. First, the increase in copper started in the Asian markets as investors scooped up the red metal from its lows.

Then in London, investors saw that there have been big drawdowns in supplies as of late, including a massive 7,425 metric ton drawdown. Inventories still stand at 608,700 tons, according to Forbes, but this was the second biggest drawdown in the past four years for the base metal (see Is the Copper ETF Back on Track?).

The bullish short-term trend continued for copper in the U.S. as the robust jobs report and the resulting equity surge caused many to buy the metal. Short covering was probably also at play for the product, adding to the metal’s impressive surge to close out the week.

ETF Impact

This news was obviously well received by the various base metal and copper ETFs on the market, as these all rose by several percentage points on the session, including the following funds:

PowerShares DB Base Metal Fund (DBB - ETF report)

This ETF roared higher by close to 4.4% on the day on volume that was surprisingly below the average. Copper takes up about 35% of the assets in the ETF, while aluminum and zinc round out the rest of the portfolio (see Time to Sell This Commodity ETF?).

iPath Dow Jones UBS industrial Metals ETN (JJM - ETF report)

This product also had a solid session, gaining over 4.5% on higher-than-normal volume. The ETN holds four commodities in its basket though—copper, aluminum, nickel and zinc—though it allocates a bigger chunk to copper at 42% of the portfolio.

PowerShares DB Base Metals Double Long ETN (BDD - ETF report)

For a truly volatile play on the base metal market, investors could look to BDD and its 200% leveraged exposure. The product has a similar holding profile to DBB (though less in zinc), and was up close to 8.1% in Friday trading.

iPath Dow Jones UBS Copper ETN (JJC - ETF report)

And finally, the most popular pure copper product on the market saw its price surge by nearly 6.7% on the day. Volume was also quite good for this ETN, as more than 144,000 shares changed hands, roughly double the normal level.

Copper Mining ETFs

Meanwhile from an equity perspective, the trading was also quite good. Currently there are two copper mining ETFs on the market; (COPX - ETF report) from Global X and (CU - ETF report) from First Trust (see Copper Mining ETFs Head-to-Head).

Both of these saw volume that was higher than normal, and gains approaching what investors saw in the commodity market. However, it is important to note that gains were less in the equity world today, though these have also been worse performers in the YTD time frame as well.

Bottom Line

Today was a perfect storm in the copper ETF market, as gains were pretty easy to come by. Not only did the jobs report result in a bullish trend, but investors also saw international markets pile on as well.

Still, even with this huge turnaround, copper ETF investing has been pretty terrible throughout 2013. So more than a few sessions like today’s will be needed to boost copper back to prominence and into the green for the calendar year.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Please login to Zacks.com or register to post a comment.

If you wish to go to ZacksFunds.com, click OK. If you do not, click Cancel.

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SUPER MICRO… SMCI 27.00 +10.25%
CANADIAN SO… CSIQ 38.34 +8.18%
BANCO DO BR… BDORY 16.78 +8.05%
CENTURY ALU… CENX 26.97 +7.97%
WILLDAN GRO… WLDN 11.38 +5.86%