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Industrial Metals ETFs Capture Investor Interest


Global gold and silver exchange traded products suffered a third consecutive week of outflows last week as traders misjudged the impact the most recent Federal Reserve meeting would have on bullion. Some industrial metals ETFs and ETNs did not suffer a similar fate.

Nickel ETNs are one example of an industrial metal product that has been on fire in recent weeks.

“Nickel is the best performing industrial metal year-to-date, up 23%, following on from Indonesia’s export ban and shrinking Chinese stockpiles. China imported about 58% of its nickel ore from Indonesia in 2013 and consensus is that the country only holds enough inventories to keep production going for 6-8 months. Some fear that potential sanctions against Russia could also contribute to further tightness in nickel ore,” said ETF Securities in a new research note.

The iPath Dow Jones-UBS Nickel Total Return Sub-Index ETN (JJN) is up more than 3% Monday, bringing its one week gain to almost 9%. Due to the aforementioned Indonesian export ban and Russia’s invasion of Ukraine, nickel has been one of this year’s top-performing metals and JJN has surged 30% as a result. Potential sanctions against Russia could halt exports from Norilsk Nickel, Russia’s largest mining company, which accounts for 17% of world output. [Trade Sanctions Lifting Nickel ETN]

Although considered a precious metal, platinum has industrial applications and has also recently been strengthening. The ETFS Physical Platinum Shares (PPLT) is up 2.2% in the past week and platinum ETPs saw inflows last week.

“ Strikes in South Africa have now entered their 12 th week, eating into inventory that major global producers had kept aside for such events. The main producers in South Africa (Lonmin, Amplats and Impala) have declared force majeure on some of their contracts, highlighting the difficulty in getting supplies of the metal to buyers,” according to ETF Securities.

The ETFS Physical Palladium Shares (PALL) is up nearly 1% Monday and higher by almost 5% over the past week, but after the white metal hit its highest levels in three years last week, investors pulled money from palladium ETPs.[Improving Sentiment Lifts Commodities ETFs]

Russia is the world’s largest palladium producer. South Africa is the largest platinum producer and second-largest palladium producer.

iPath Dow Jones-UBS Nickel Total Return Sub-Index ETN

ETF Trends editorial team contributed to this post.

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.