Europe's Mining ETFs Jump on Copper Shortage

All copper mining UCITS ETFs booked double-digit gains over the past month.

Jamie_Gordon
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Reviewed by: Ron Day
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Edited by: etf.com Staff

The recent copper rally driven by reduced mine supply and a resurgence in Chinese industrial demand has buoyed mining ETFs offered by Global X, Sprott Asset Management and BlackRock in recent weeks.

Leading the pack with gains of 19% over the past month was the iShares Copper Miners UCITS ETF (COPM), according to Trackinsight data.

COPM physically replicates the STOXX Global Copper Miners index, capturing 34 copper mining equities. Given mining equities tend to experience higher volatility than underlying metals, the ETF has booked impressive returns while copper futures bounced 8.9% over the past month.

The Global X Copper Miners UCITS ETF (COPX) also returned 18% over the same period, while the broader Global X Disruptive Materials UCITS ETF (DMAT) gained 16% over the month to April 8.

The ETF physically replicates the Solactive v2 Disruptive Materials index, providing exposure to 44 companies producing metals and other raw materials essential to technologies including lithium batteries, solar panels, wind turbines, fuel cells and 3D printers.

While its basket encompasses miners covering a range of metals, Global X underlined the recent copper rally, driven by mining and refining cuts, China’s manufacturing rebound and India’s expansive infrastructure spending.

“Production cuts at mines worldwide are still increasing, with the latest of 6.5% quarterly drop in output from Ivanhoe Mines at the massive Kamoa-Kakula mining complex in the Democratic Republic of the Congo," Roberta Casselli, commodities strategy and research at Global X, said. “Disruptions at major mines have left Chinese smelters with a sharp decline in concentrate treatment fees and now the question is whether they will make meaningful cuts to output to safeguard their earnings.” 

Casselli noted global visible inventories remain 41% below their five-year seasonal average, with further anticipated decline this quarter likely to further strain already stretched supply.

“After a 0.1-point increase in February, China's March Caixin manufacturing PMI jumped 0.2 points to 51.1, marking the highest reading in thirteen months and indicating strong momentum in manufacturing and service activities,” Casselli said. “Opportunities for significant new demand growth may also arise due to India's massive infrastructure spending boom. A government source reported India will send two delegations to Chile next month to scout copper deposits amid rapid economic growth and energy transition plans.”

This article first appeared on etf.com's sister publication etfstream.com at Copper shortage leads surge in mining ETFs (etfstream.com)

Jamie started at ETF Stream as a reporter in January 2021. Previously, he was a senior journalist at the UK Investor Magazine, Investment Observer, UK Startup Magazine and UK Property Journal. He holds an undergraduate degree in politics and international relations, and a postgraduate degree in ethics.