The Dow Jones-UBS Copper Subindex Total ReturnService Mark is a sub-index of the Dow Jones-UBS Commodity Index Total ReturnService Mark and reflects the returns that are potentially available through an unleveraged investment in the futures contracts on physical commodities comprising the index plus the rate of interest that could be earned on cash collateral invested in specified Treasury Bills. The index includes the contract in the Dow Jones-UBS Commodity Index Total ReturnService Mark that relates to a single commodity, copper (currently the Copper High Grade futures contract traded on the COMEX).
See more details on sponsor's website
The SEC pushes back an approval deadline for BlackRock's copper ETF just days after approving JPMorgan's offering. As with the JPM fund, lawmakers and those in the industry worry a physical ETF could draw inventory from the world supply, raising both the price and price volatility.
Over the objections of certain lawmakers and consumers of the metal, the SEC approves JPMorgan's plan to launch an ETF physically backed by copper. The worry is the fund would remove a significant amount of copper from the world supply, driving up volatility and prices.
Jim Cramer's take on Freeport McMoran's (FCX) big deal for McMoRan (MMR) and Plains (PXP): "It doesn't pass the smell test." For FCX shareholders, the "instant re-coloration" of the company from copper to oil and copper should cause worry that maybe something's wrong with the copper side. The deal shows the fallacy of playing the mining stocks instead of the ore; the way to play copper is through JJC.
Copper supply shortages will extend into the first half of next year, Barclays estimates, as an accelerating Chinese economy more than doubles the pace of growth in global consumption. Demand will outpace supply by 316K metric tons in H1, more than all copper in London Metal Exchange warehouses, before a surplus emerges in H2.
Industrial metals prices are set to rally into the middle of 2013, says Westpac's Justin Smirk, who has the hottest hand in forecasting of late. He's keeping it simple: Easy money in the U.S. and Europe will combine with a rebounding Chinese economy. Copper, zinc, nickel, and aluminum are all headed higher.
Copper prices that have risen fivefold in the past decade are the new normal and are unlikely to fade much, Chile's finance minister says. The price of the metal has averaged $3.61/lb. this year vs. $1.79 in the 2000-09 decade, but the finmin of the world's top copper miner doesn’t think prices will see $2.00-$2.50: "That would happen in the very worst part of the cycle, but not as a structural issue.”
A growing number of analysts and traders believe the days of copper’s decade-long scarcity could be coming to an end, as the red metal's biggest consumer - China - is struggling and miners are beginning to pick up production. The ICSG predicts mined supply of copper will increase by 6.4% next year, the biggest rise since the mid-1990s.
Copper prices could trade lower next year in an uncertain economic outlook, but the consensus among metals traders and mining execs is that the move is more likely to be a grind than a collapse as supplies remain tight. Even though production is rising, inventories remain low and the mining industry is expected to again fall short of its promised production.
More signs of a mining boom turned bust, Chinalco (ACH) looks set to cut the size of the Hong Kong IPO of its Peruvian copper mining unit to about $400M from $800M (which was a cut from the initial $1B). A market in short supply no more: Chinese copper consumption is set to shrink this year, says Simon Hunt.
Copper consumption in China is expected to drop 8.5% to 5.6M metric tons this year, contracting for the first time since 2008 before rebounding in 2013, Simon Hunt says: "The safety valve of exports has gone, the domestic economy is slowing down, they have a problem of surplus capacity and cash is extraordinarily tight... There are no signals of a recovery in heavy industry and manufacturing."
Used to correlations among asset classes seemingly near 1 for the past few years, do market watchers need to get ready for a new regime? The S&P 500 and the price of copper have begun to widely diverge, with their correlation over the past 30 days recently hitting zero!
Copper futures (JJC +2.2%) jump 3.3% to their highest settlement in five months as investors flocked to buy in the wake of the Fed's QE3 decision. TD Securities' Bart Melek is mindful that U.S. copper demand had slumped 18% in 2009 before the launch of QE2; by Q4 2011, demand had surged 9.4% Y/Y to 424K metric tons.
Gold hits its highest level since February, +1.4% to $1,731 as QE expectations for next week ratchet up following the payroll report. Silver and copper follow suit, both posting large gains and multi-month highs. And don't forget Beijing - now getting serious about its own stimulus efforts.
Does the divergence of copper (JJC) and the homebuilders (XHB) offer an investment opportunity? Reports of declining economic growth in China, Europe and the U.S. have taken copper lower, likely a bearish indicator for homebuilders, Tim Seymour writes; their shares have soared, but the slowest part of the year is looming for the international real estate sector, particularly homebuilders.
Commodity prices have only begun to drop, writes Michael Pettis (not yet available on web), attributing nearly the entirety of increased demand over the past decade to "incredibly unbalanced growth" in China (now coming to an end). Recently, it's gotten even more unwholesome, with much of Chinese demand going to build mountains of inventory. Expect the country to soon become a net seller of a number of commodities.
The ground is literally cracking under the weight of copper inventories in China, write 2 analysts from SCB, surprised at the speed with which a downtrend of stocks has reversed, and the ability of warehouse operators to somehow pack even more of the metal in. JJC hangs in there, -3.3% YTD.