Popular copper ETFs face hurdles -Credit Agricole

Wed Oct 27, 2010 1:06pm GMT

* Copper proving popular choice for base metal ETF plans

* Downsides could include wild price distortions

LONDON, Oct 27 (Reuters) - Launching physically backed copper exchange traded funds (ETFs) will be popular, but could face hurdles as supplies for the red metal tighten, Credit Agricole said on Wednesday.

Talk that physically backed exchange-traded products (ETPs) in industrial metals are imminent has dominated base metals markets in recent months, generating speculation about their effect on prices and demand. [ID:nLDE68J0R6]

Several firms have put forward plans for base metal ETPs over the past month, with copper proving a popular choice.

JPMorgan Commodity ETF Services (JPM.N: Quote) registered to launch an ETP for copper in a filing late last week with U.S. regulator the Securities and Exchange Commission. [ID:nLDE69O174]

"In theory copper would be the one everybody wants because of the tight fundamentals, the exposure to China," Robin Bhar, analyst at Credit Agricole, said after a media briefing.

"The practicalities are a different matter. There are very low stocks and the stocks that are available are tightly held," he told Reuters.   Continued...

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