Will The Aluminum ETF Soak Up A Portion Of Supply And Lend A Prop To Prices
“With a surplus of aluminum on world markets, a planned exchange-traded fund promises to soak up a portion of supply and lend a prop to prices — much as other commodity funds are credited with doing. Details of the ETF are being finalized by Swiss commodity supplier Glencore International SA and Credit Suisse Group. If the product gets the regulatory go-ahead, the merchant, Glencore, will need to buy aluminum as physical backing for the fund,” Andrea Hotter Reports From The WSJ.
“Credit Suisse and the merchant trader, have yet to submit a regulatory application for the ETF. This means the potential timing of the launch remains unclear and a formal announcement premature, people familiar with the matter said. But the timing would be ideal. Many aluminum companies were swift to cut production when prices more than halved as the economic downturn crimped demand. Now, the well-supplied market has suffered as smelters are restarted in response to rising prices. On the London Metal Exchange, aluminum is at around $1,800 a ton, up about 50% from seven-year lows in February. That supply push threatens to depress prices again,” Hotter Reports.
“If the aluminum ETF is half as successful as funds launched for the gold market, concerns about another serious price slump could become a distant memory. ETFs have become the biggest growth area for gold demand, outpacing jewelry- and industrial-consumption growth,” Hotter Reports.
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