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Thanks to a surging dollar, global growth worries and supply glut, industrial metals have been hammered badly this year. In particular, copper was the hardest hit by worries about slowing growth in China. This is especially true as China is the biggest consumer of the metal and accounts for about 45% of copper demand. Additionally, the red metal is used in global construction and manufacturing activities, which are experiencing a slowdown. Notably, copper plunged to a six-year low, losing nearly 30% so far this year. Even the announcement of production cuts in the weekend by Chinese producers did not yet help the price to stabilize. Production Cuts In order to counter slumping prices, 10 leading Chinese copper producers plan to cut their output by 350,000 metric tons in 2016, or about 5% of China’s annual production. The move could ease fears of a protracted supply glut and give some support to copper prices. However, many traders believe that the supply cuts are too small and insufficient to rebalance the metal market amid disappointing macro fundamentals. Outlook Still Bleak Weak economic activities in China have been weighing on copper demand and are expected to do so in the coming months as well. This is because manufacturing activity in China shrunk for the fourth straight month in November to the 3-year low, underscoring persistent weakness in the world’s second-largest economy. Most of the other developed and developing economics are also experiencing sluggish growth which is weighing on the global demand for copper. Adding to the woes is the prospect of a rates hike in the U.S. later this month that has dampened the appeal for metals as a store of value owing to a strengthening dollar. Given the bleak fundamentals, it seems that Chinese production cuts are not enough to reduce the global supply glut and drive copper prices upward. So, investors should currently avoid trading in copper ETFs. In addition, these funds have an unfavorable Zacks ETF Rank of 4 or ‘Sell’ rating, suggesting that these will continue to underperform in the months ahead. iPath Bloomberg Copper Subindex Total Return ETN (NYSEARCA: JJC ) The ETN tracks the Bloomberg Copper Subindex Total Return Index, which seeks to deliver returns through an unleveraged investment in the futures contracts on copper. The index currently consists of one futures contract on the commodity of copper (currently the Copper High Grade futures contract traded on the COMEX). The product charges investors 75 bps a year in fees, and has a lower level of AUM of $34.2 million. It trades in paltry volume of about 20,000 shares a day on average. The ETN shed nearly 30% so far this year. United States Copper Index Fund (NYSEARCA: CPER ) The fund seeks to track the performance of the SummerHaven Copper Index Total Return, plus interest income from CPER’s holdings. The index provides investors with exposure to front-month copper futures contract traded on the on the NYSE Arca. The product has amassed $2 million in its asset base while sees paltry volume of about 1,000 shares a day. Expense ratio came in at 0.65%. The ETF has lost 27.5% in the year-to-date time frame. iPath Pure Beta Copper ETN (NYSEARCA: CUPM ) This note seeks to match the performance of the Barclays Copper Pure Beta Total Return Index. Unlike many commodity indexes, this can roll into one of a number of futures contracts with varying expiration dates, as selected, using the Barclays Pure Beta Series 2 Methodology. This approach results in less contango, which is an important factor, as shifting from month to month in contracts can eat away returns in an unfavorable market situation. The note has amassed $1.6 million in its asset base and trades in a meager volume of about 200 shares a day. Expense ratio came in at 0.75%. CUPM is down 27% so far this year. Original Post