Industrial metal ETPs see record inflows

ETF Securities writes that industrial metal ETPs recorded the largest weekly inflows since summer 2014 with a record inflow of USD112.9 million, the largest weekly inflow since August of that year.

“Investors increased their exposure to the basket and copper with USD77.3 million and USD34.5 million inflows, respectively. Nickel was the best performer last week with a price rise of 4 per cent, followed by copper (3.3 per cent) as both metal supply deficits were reported higher than last year according to their respective international study groups,” ETF Securities writes.
Beyond the supply deficit, investors have been more sensitive to climate change with the latest Global Carbon Project report highlighting that carbon emissions will increase by 2 per cent this year which makes the 1.5°C global target cap unlikely.

“We believe more investment into green projects, renewable energy and electric vehicles is very likely. This could be the beginning of a long-term trend that will benefit copper, nickel and other base metals.”

Robotic ETP continues to see inflows on a better-than-expected earnings season, the firm says. “Last week saw USD49 million inflow into the robotic ETP, bringing the fund’s assets under management above USD1 billion. 92 per cent of the constituents of the Robotic index have reported earnings as of last week among which 62 per cent are beating expectations, representing an earnings beat margin of 12 per cent. The Robotic index price-to-earnings ratio is currently 29.8x above its historical average. However, the index continues to trade at a discount to the MSCI World IT index.”

Gold and oil ETPs recorded outflows on profit-taking as prices continue to rise against market expectations, ETF Securities writes. “Last week saw oil and gold ETPs recording outflows of USD21 million and USD31 million, respectively as oil prices reached new highs. Meanwhile, the gold price closes in on the USD1,300/oz. mark, despite some potential downward pressure ahead of the Fed December rate hike. Despite US oil production now being above its 2015 peak, WTI rallied by 4.2 per cent last week, potentially on larger-than-expected decline in US oil inventories, while Brent rose by 1.8 per cent, reducing its premium to WTI to USD4.9/bbl. Brent prices underperformed as Saudi Arabia exports increased in November compared to the September and estimated October levels, despite cuts in oil allocations of 560,000 barrels per day in November. Long WTI ETPs saw USD14.5 million outflows while USD5.9 million were withdrawn from long Brent ETPs.”

Finally, silver ETPs recorded the largest weekly inflows since September, benefiting from the attractiveness of industrial metals. Around 8 per cent of silver consumption is used in the making of photovoltaic cells, ETF Securities writes. This share is likely to increase in the next decade as the world makes the transition to a low-carbon economy. Silver, among other base metals, is likely to benefit from the demand boost. Last week saw USD8.6 million move into silver ETPs despite little movement in price.

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