Three Top Ways to Trade a Potential Aluminum Ban

Sep 30, 2022
Highlight on chemical element Aluminium in periodic table of elements. 3D rendering

Aluminum stocks are on the move.

All on news the London Metal Exchange could ban Russian aluminum.  

“Such a move would be significant for the global industry. Russia accounts for about 5% of global aluminum production. That might sound like a relatively small percentage, but the threat of a shortages can send any commodity price soaring,” says Barron’s.

Also, according to Morningstar, “Aluminum prices on the London Metal Exchange soared on a report the exchange is taking a step to ban supplies from Russia. Aluminum rose 8% to $2294.50 per metric ton as Bloomberg News reported the exchange plans to launch a discussion paper on whether to block supplies of Russian metal to its warehouses.”

If true, investors may want to keep an eye on aluminum stocks, like Alcoa (AA) and Century Aluminum (CENX). Or, it may be best to consider ETFs that include aluminum, such as:

iPath Series B Bloomberg Aluminum Subindex Total Return ETN (JJU)

With an expense ratio of 0.45%, the JJU tracks an index of aluminum futures that rolls into new contracts every other month. 

Invesco DB Base Metals Fund (DBB)

With an expense ratio of 0.77%, the ETF tracks changes in the level of the DBIQ Optimum Yield Industrial Metals Index Excess Return. About 32.55% of its assets are aluminum. It also has assets in zinc (35.15%), and copper (29.87%).

iShares U.S. Basic Materials ETF (IYM)

With an expense ratio of 0.39%, the ETF offers exposure to U.S. companies involved with the production of raw materials, including metals, chemicals and forestry products.  Some of its top holdings include Freeport McMoRan, Albemarle Corp., Nucor Corp., and Steel Dynamics.