Non-Ferrous Metal Demand Rises... Nine of Top ETF Returns Are Commodities
KODEX Steel 19.71%·KBSTAR 200 Steel Materials 19.58% Up
[Asia Economy Reporter Song Hwajeong] As raw material prices continue to soar, exchange-traded funds (ETFs) related to raw materials are also showing strong performance. The upward trend in raw material prices is expected to persist for the time being, suggesting that related ETFs will continue to perform well.
According to the Korea Exchange on the 4th, among the top 10 ETFs by returns over the past month, 9 were raw material ETFs. KODEX Steel rose the most by 19.71%, followed by KBSTAR 200 Steel Materials at 19.53%. Other high-performing ETFs included KODEX 3 Major Agricultural Products Futures (H) (19.28%), TIGER Agricultural Products Futures Enhanced (H) (18.64%), TIGER 200 Steel Materials (18.52%), TIGER Physical Copper (12.45%), KODEX Copper Futures (H) (11.17%), KBSTAR Palladium Futures (11.01%), and KODEX Soybean Futures (H) (10.48%).
The recent rise in raw material prices is interpreted as the driving force behind the strong performance of raw material ETFs. According to Daishin Securities, the CRB (Commodity Research Bureau) raw material index rose 7.5% compared to early April, continuing its upward trend since April last year. Notably, prices of agricultural products and non-ferrous metals have increased significantly, with the S&P GSCI Agricultural Products Index and the London Metal Exchange (LME) Non-Ferrous Metals Index rising 15.1% and 10.6%, respectively, compared to early April. Copper surpassed $10,000 last week, reaching its highest level in 10 years. On the 29th of last month (local time), copper prices on the LME closed at $10,800 per ton, the highest since February 2011 ($10,190). Copper prices have risen nearly 30% this year alone and more than doubled since the March low. Nickel prices also recovered from the March slump, exceeding $17,000 again.
Kim Sohyun, a researcher at Daishin Securities, analyzed, "The rise in agricultural product prices can be attributed to abnormal weather in the U.S. Midwest and supply disruptions caused by deteriorating grain quality in Brazil." She added, "For non-ferrous metals, besides expectations of demand recovery, issues such as union strikes and production regulations have contributed to price increases."
Raw material prices are expected to continue rising. Researcher Kim said, "In an inflationary environment, the investment appeal of raw materials will increase. The industrial shift toward renewable energy is a structural demand growth factor for non-ferrous metals, and recent strengthened lockdown measures in Chile, the world's largest copper mining country, are expected to further boost copper prices."
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