Industrial Metals Offer Chance To Tap Global Infrastructure Growth
Copper, Cobalt, Iron, and Lead
Copper is one of the most widely used metals but also one of most scarce. You can participate in the copper trade through mining stocks like Freeport McMoRan, BHP Billiton, and Rio Tinto or the First Trust ISE Global Copper Index Fund, an ETF which tracks 27 stocks actively engaged in copper mining.
Copper is also traded through futures and options contracts on the CME as well as two ETNs: iPath Pure Beta Copper and iPath Dow Jones-UBS Copper Subindex , which invest in futures contracts on different exchanges and employ different approaches.
This metal, which is derived primarily from the mining of nickel and copper, is critical to the production of lithium ion batteries used in hybrid car engines and is also used in metal alloys.
Cobalt is one of the least accessible of the base metals, with the only direct investment option being futures contracts on the London Metal Exchange. You also can gain exposure through the thinly traded China Sun Group High Tech, a cobalt compound producer and indirect exposure via OM Group, a specialty chemicals company.
Nickel is a key component in production of steel and other metal alloys. The metal is currently suffering from a combination of oversupply and falling demand. Prices have dropped about 15 percent from a high of $28,500 per ton in February and are expected to stay weak due to uncertain global economic growth.
You can invest in nickel though the ETNs iPath Pure Beta Nickel and iPath Dow Jones-UBS Nickel Subindex or through nickel-focused mining stocks Norilsk Nickel and Vale.
Like nickel, iron ore is also a primary component of steel. Prices for iron ore have nearly tripled since 2008 as global steel demand from China and other emerging markets has returned. You can gain access to iron prices through global mining stocks and steel stocks like Nucor and ArcelorMittal.
Primarily used in batteries, lead is typically found in the same deposits that produce copper and zinc. Lead was the worst performing metal on the London Metal Exchange for the six months of 2011 but has since rallied. The soft metal is accessible through theiPath Pure Beta Lead ETN and iPath Dow Jones-UBS Lead Subindex .
If you prefer a slightly more diversified exposure to industrial metals, iPath offers two ETNs that track aluminum, nickel, copper and zinc futures: Pure Beta Industrial Metals and Dow Jones-UBS Industrial Metals. TheElements Rogers International Metals ETN tracks those four metals plus lead and tin.