London, 15 October 2010

The three letters E, T, and F dominated almost every event during this year's LME week. Indeed, the fervour over the impact of launch of physically backed exchange traded funds (ETFs) was prompted initially by last week's press stories of plans by Goldman Sachs and Blackrock (Goldman and Blackrock refused to comment on the press speculation) to launch physically backed copper ETF.

ETF Securities, experienced in running physical precious metals ETFs, got in on the act on Monday 11th, announcing it intended to launch physical ETFs covering all the base metals, though no time scale for a launch was mentioned.

Talk of physical base metals ETFs is nothing particularly new. It is generally acknowledged that Glencore and Credit Suisse have been working on a physical Aluminium ETF for at least the last year.

It is also rumoured that Deutsche Bank are also working on an aluminium ETF for some time. Indeed, the Russian based aluminium producer RUSAL announced this week that it was planning to supply up to 1 million tonnes of physical aluminium to ETFs next year.

Rumours of nickel ETFs have also persisted, and given a certain degree of credence during a press conference on Friday October 8th, when Russian nickel miner Norilsk stated it would be happy to sell metal to funds.

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