The JJC tracker is an ETN (exchange traded note), a product similar to an ETF, with the difference that an ETN is more like a bond in the sense or if the issuer goes bankrupt (in this case Barclays) the loss in capital may be total. The quality of the issuer is therefore important and in this case one of the main English banks, the risk associated with the issuer is extremely low. However, the product may react negatively to a downgrade of its credit rating.
This ETN reproduces a set of copper futures contracts (COMEX), which is a fairly accurate exposure to copper prices.
The fees for this ETN are 0.75% while the amount outstanding is $ 67m.
Copper as a raw material is mainly traded on the London Metal Exchange or LME with daily quotations. Other futures and options on copper are traded on the New York Mercantile Exchange or NYMEX in the United States and on the Shanghai Futures Exchange in China. Changes in copper prices depend on a number of factors and mainly track the situation of the world and US economy in particular. Like all commodities, copper is influenced by the value of the US dollar, its price being quoted in that currency. Copper is mined as ore, mainly in Chile and Peru, which together account for nearly 40% of world production. As a result, the incidents affecting these two countries, and their relations with the rest of the world may have a direct influence on the production and export of copper, and thus also influence the price of this raw material.
China and Japan are the largest importers. Copper is indeed a material critical to the industry because of its resistance to corrosion and its excellent electrical conductivity. It is thus used in the manufacture of electronic equipment and electrical wiring, but also in industry and in plumbing, so it is very sensitive to changes in the building market and economic conditions.
Copper prices act as a true economic indicator and give a good indication of the world economy momentum. A moderate increase or flat rates would be beneficial for growth and would therefore be a trigger for higher prices on base metals such as copper, especially since many countries in Asia and Africa are growing and need to invest further in Infrastructure and their industries. As a result, demand for copper as the world's largest consumer (China) is expected to exceed expectations this year, and Chile, the world's leading producer, has recently raised its metal price estimates for 2017 And 2018. Beijing would have informed the WTO that it wants to prohibit the import of scrap by the end of 2018 in order to limit the pollution generated by the treatment of waste materials recovered from all over the world. Beijing has not yet specified which metallic waste would be banned. The idea of such an embargo on the falls of cables, wires, engines, etc. Is probably the reason for the rise in recent weeks, as it could encourage China to buy more refined copper (better quality than that contained in waste).
On the supply side, despite the increase in capacity, Glencore said it would produce less than expected this year and Chilean giant Codelco has done the same because in many old mines, the quality of copper has declined. In the Q117, Codelco's production dropped by 11%, Glencore's production decreased by 9% in six months. Besides urbanization and electrification, transportation will be one of three channels to offer a large growth potential for copper demand over the next ten to fifteen years. India and China will mainly drive this demand, as well as technological developments: an electric car contains about 80 kilograms of copper, four times more than a conventional car, besides the battery, it is necessary for the electrical wiring of the vehicle and for the engine. Renewable energies are another important relay.
