New York: Investors in exchange-traded funds are taking a shine to metals.

Assets held in long-only industrial-metals ETFs reached $1.33 billion (Dh4.8 billion) in January, the highest since September 2014, data compiled by Bloomberg Intelligence showed. Net-long positions in copper surged to a record last week, as the tally of outstanding contracts on the Comex in New York extended their ascent to an all-time high.

The Bloomberg Industrial Metals Sub-index has rallied more than 6 per cent this year in its best start to a year since 2012 amid signs of economic stabilisation in China, the world’s largest consumer of these raw materials. In 2016, the nation’s fixed assets investment in infrastructure climbed 17 per cent, boosting demand. Mounting supply concerns in some metals, along with bets on increased spending on US bridges, roads and airports following the election in November, have also given prices a lift.

“The fundamentals are starting to shape up after many years of oversupply and decreasing demand,” said Maxwell Gold, a New York-based director for investment strategy at ETF Securities LLC. Investors are jumping back in amid “expectations of deficits for nickel and other metals to persist into 2017 and potentially into 2018 as well.”

London-listed ETFS Industrial Metals, managed by ETF Securities, attracted $41.8 million this year through Friday, the most among 124 industrial-metal ETFs tracked by Bloomberg. The jump comes after its biggest quarterly inflow since inception in 2006, data compiled by Bloomberg show. Assets in the fund have reached $243.9 million, up 28 per cent from the end of 2016, as prices rallied.

China has been showing signs of stabilising growth in recent months, as an increasingly wealthy middle class helps shift the economy away from a reliance on investment and trade. The JPMorgan Global Manufacturing PMI held steady at a 34-month high in January, as production increased for the fifty-first consecutive month.

Government crackdown

Nickel advanced about 5 per cent this month through Monday, delivering the biggest return of 22 raw materials on the Bloomberg Commodity Index, amid speculation that the government crackdown on mining in the Philippines will curb supply from the nation that accounts for about a fifth of world output. On Monday, the metal rose 2.2 per cent to settle at $10,450 a metric ton on the London Metal Exchange.

Copper has rallied 22 per cent in the past six months on the LME, as workers at Escondida, the world’s largest copper mine, moved closer to a strike. The threat of a work stoppage at BHP Billiton Ltd.’ s mine in Chile comes at a time when Freeport-McMoRan Inc is still awaiting approval from the Indonesian government to resume copper concentrate exports from its Grasberg mine.

Barclays Plc forecast last week that these supply risks could push copper above $6,000 a ton. Copper closed 1.3 per cent higher at $5,846 a tonne on the LME.

Zinc has climbed 67 per cent in the past 12 months, the best performer on the Bloomberg Commodity Index, as shuttered mines helped push the market to a deficit. Demand exceeded production by 263,000 tons in the first 11 months of 2016, the International Lead and Zinc Study Group said Jan. 16.