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Natural gas ETC inflows continue to surge

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Natural gas exchange-traded commodity inflows continued to surge last week, receiving the strongest investor interest across ETF Securities’ commodity ETC platform.

Combined inflows into ETFS Natural Gas, ETFS Forward Natural Gas and ETFS Leveraged Natural Gas increased by USD56m, bringing total inflows this year to nearly USD1.5bn, more than any single commodity play other than gold.

Most of these flows have come in since early May, coinciding with outflows from long oil ETCs. ETF Securities says the timing is unlikely to be a coincidence and indicates that one of the key drivers of interest in natural gas has been the dramatic rise in the oil/natural gas price ratio as the oil price has more than doubled this year while natural gas prices – up until recently – declined.

ETFS Physical Palladium holdings hit an all-time high making it the world’s largest physically backed palladium ETC/ETF in world with 627,305 ounces of palladium backing it. Last week it saw inflows of USD12m, bringing total inflows this year to USD120m. Total palladium holding have increased 296 per cent since the beginning of the year.

Platinum holdings of ETFS Physical Platinum rose to 426,143 ounces, a new all time high, maintaining its position as the largest physically-backed platinum ETC/ETF in the world. Total inflows this year are up USD296m in US dollar terms, a 92 per cent increase since the beginning of the year.

ETFS Copper has also seen strong inflows recently, highlighting strong investor demand for assets closely tied to economic recovery and China demand. Last week it saw USD13m of new inflows, bringing total inflows this year to USD42m, the largest inflow for any single industrial metal ETC.

Within industrial metals only ETFS Industrial Metals, which tracks a diversified basket of industrial metals returns, has seen more inflows with total inflows of USD68m.

Assets under management in ETFS’ industrial metals ETCs now stand at USD243m, up 500 per cent from the low point in December 2008.

While the more cyclical metals have seen strong demand recently, physically backed gold ETCs saw outflows last week. With the gold price hitting consecutive new all-time highs over the past few weeks it appears that some of the more tactical players are using recent price gains to take some profits. There is little indication that large strategic investors’ are tempering their long-term bullish stance.

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