If ETF providers launch a physically-backed aluminum fund, it could have a big impact on prices in an upward direction, according to one analyst.
According to Citigroup, the price of aluminum could soar by as much as $500 a metric ton if plans to introduce aluminum-backed ETF go through. Thus far, an ETN focused on aluminum is the only focused and trading product available for investors who want exposure to the metal. Many investors have been hotly anticipating a physically-backed fund, which could unleash a storm of pent-up demand.
A bevy of aluminum companies would be set to benefit and increased aluminum companies would also support the futures. The Citigroup analyst suggests that such a fund could impact prices by as much as 24%, reports Commodity Surge. That’s the amount global consumers use in about two weeks.
At this point, three ETFs are “technically ready” to be offered, according to Rusal, the world’s largest aluminum producer. Rusal is in discussion to supply the metal to banks for such a fund, reports TheStreet.
- iPath DJ-AIG Aluminum ETN (NYSEARCA:JJU)