Zinc, Aluminum Are the `Ideal Candidates' for ETFs, Morgan Stanley Says

Zinc and aluminum are the “ideal candidates” for exchange-traded fund products backed by physical metal, according to Peter Richardson, chief metals economist at Morgan Stanley Australia Ltd. Richardson made the comments in an interview with Bloomberg News yesterday.

“Zinc and aluminum are metals in structural oversupply. They need time, either in terms of cumulative demand growth or constraint in supply mechanisms, to bring about a better fundamental market.

“We think both of them are going to be ideal candidates because of the liquidity in the inventory, to do physically- backed ETFs, much more so than copper or nickel or tin because the danger with those metals is where there’s tightness, term structures will induce investors to sell rather than buy.”