​Chinese surprise inspires record industrial metal ETP flows


Positive trade data from China saw a record weekly flow of $28m (£18.1m) to industrial metal exchange traded products, according to ETF Securities.

With industrial metal demand seeing a boon from Chinese data, precious metals suffered an outflow of $82m last week, the group’s latest flows data shows.

Chinese trade improved in July, with export and import growth going to 5.1 per cent and 10.9 per cent for the month. The export and import numbers beat market expectations by 2 and 1 per cent respectively, while industrial output rose 9.7 per cent year on year.

Energy demand grew off the back of this data with $42m coming into ETPs over this period with declining natural gas prices appearing attracting despite rising storage levels.

ETF Securities says: “Positive economic news, particularly from China, continued to fuel a commodity price revival last week. Our long held view of sustained robust growth for the Chinese economy remains in place and should continue to favour more industrially-linked metals and energy.”

Within industrial metals, ETFS Aluminium saw record inflows of $54m. This was aided by news that Rio Tinto announced its intention to shut down the Shawinigan smelter by the end of November while other producers are eyeing cuts – which would support the price of the metal.

But the better-than-expected Chinese data also drove up the price of copper and as a result ETFS Copper saw outflows of $22m as investors took profits.

Looking to energy, ETFS Daily Leveraged Natural Gas saw inflows rise to two year high highs of a total of $32m – however, crude oil ETPs suffered $12m of outflows. The ETFS Longer Dated Energy ETP also saw inflows – with $27m coming in last week, the second largest inflows on record.

Precious metals ETPs were hit by a $82m in net outflows. ETFS Physical Silver, however, saw the largest inflows on record of $145m as positive industrial production figures in China prompted an investor switch from gold to silver. According to ETF Securities, over 50 per cent of silver demand comes from the industrial sector versus 10 per cent for gold.