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Copper Users, Traders Blast JP Morgan's Plans For Copper ETF

Today : Wednesday 23 May 2012

The threat of exchange-traded funds backed by physical copper remains a rallying point for U.S. manufacturers and copper traders, according to a complaint filed with the Securities and Exchange Commission.

A letter sent to the SEC blasts J.P. Morgan Chase & Co.'s (JPM) plans to launch such an ETF, claiming such an instrument would hurt industrial users of the metal. The letter was filed by the law firm Vandenberg & Feliu LLP, which represents a major copper merchant company and several U.S. copper product makers, according to the document.

ETFs trade like stocks, but actually represent ownership of the physical metal stored on the investors' behalf.
Copper users have long feared that allowing such metal-backed ETFs to list in the U.S. would attract too many investors and syphon metal away from manufacturers.

"You've got a 17 million-ton market which is theoretically short by 500,000 ton deficit. So if you take metal out of that market and put it in a box, that makes it more difficult to operate," a person familiar with the matter said.

-By Tatyana Shumsky, Dow Jones Newswires; 212-416-3095; [e-mail]