TOKYO —? United Company RusAl said Tuesday that an exchange-traded fund for aluminum is set to start as early as next month, offering support after lower prices forced smelters globally to shut.
RusAl and other producers are in talks to supply the metal for the fund, which may buy as much as 1 million metric tons of aluminum in a year, chief executive Oleg Deripaska told reporters in Tokyo, without identifying which financial institution will introduce the product.
Aluminum prices in London have declined 11 percent this year amid concerns that China’s measures to curb its property market will curtail demand and as the European debt crisis roiled markets. An exchange-traded fund may help support metal prices as physical demand stayed strong, Deripaska said.
“You will see the first ETF launch next month, as far as I understand,” Deripaska said. “It’s a new instrument to hedge” against risks stemming from currency fluctuations and energy prices, he said.
Investors buy exchange-traded funds as a way to gain from price increases in the underlying commodity. At least three aluminum ETFs are “technically” ready to be offered to investors, Deripaska said in April.
Prices of the metal will rise to $2,400 a ton by the end of the year as physical demand remains healthy, he said Tuesday. RusAl won’t change its production target this year, he said.
“Improvement in the transportation sector for the last six months creates quite a good demand,” Deripaska said.