While there is plenty of uncertainty still facing the world, overall economic growth seems to be moving in a positive direction. As the global recovery has taken hold, industrial production across a variety of nations has increased. Accordingly, as the go-to industrial metal, copper has seen its star shine over the last few months. However, another base metal might suit investors better. Aluminum and its producers could be one of the best long-term ways to play rising industrial production.

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Growing Long-Term Demand
While copper takes the cake as the main base metal, aluminum is equally important to global industrial production. Finding its way into everything from consumer products and airplanes, to various infrastructure components, the metal has seen its demand rise. Aluminum demand has grown by 38% over the last ten years, out-pacing the 20% growth in other metals. Analysts estimate that breakneck growth will continue as various emerging markets are beginning their own economic transformations. Asia excluding China is expected to see aluminum demand rise by a record 9% throughout 2012. China alone will see its demand peak at 11% this year or about 44% of the world's total aluminum production. Likewise, demand across the developed world will be robust, despite Europe's pending problems. (For related reading, see Investing In The Metals Markets.)

This burgeoning demand comes at a time when supplies continue to be tight. After a disastrous showing during the credit crisis and Great Recession, aluminum producers implemented a number of operational and financial actions to improve their cost structures. The resulting curtails in production have sent prices skyrocketing. Since December 30, aluminum prices trading on the London Metal Exchange have risen 11%.

The long-term picture is rosy for aluminum. However, the short term may provide the "in," that investors are looking for. According to analysts at the Royal Bank of Scotland (NYSE:RBS), even with production cuts, global supply will outweigh demand by 800,000 metric tons this year. That might be enough over-supply to cut aluminum prices and provide investors a buying point. Overall, the demand for the base metal should continue to eclipse supplies and a backstop for sustained higher alumina and aluminum prices.

A Foil Portfolio
Given the rapid industrialization across the emerging world, investors may want to look at aluminum for a portfolio addition. The potential dip in prices this year could provide a nice entry point for more long-term ambitions. While there has been some market chatter about the creation of a physically backed aluminum ETF, that hasn't happened yet. So investors are stuck using futures pricing in order to gain exposure to the metal. Investment bank Barclay's (NYSE:BCS) has issued both the iPath DJ-UBS Aluminum ETN (NYSE:JJU) and iPath Pure Beta Aluminum ETN (Nasdaq:FOIL), which allow investors to track aluminum prices. The Pure Beta ETN uses a unique indexing strategy in order to eliminate the forces of contango and backwardation. However, the fund has yet to catch on with investors. The better bet is to go with the JJU.

Perhaps a better way to tackle rising aluminum prices is through the miners/producers of the metal. The Global X Aluminum ETF (Nasdaq:ALUM) tracks a basket of 22 producers, with top holdings in Rio Tinto (NYSE:RIO) and Kaiser Aluminum (Nasdaq:KALU). The ETF charges 0.69% in expenses and acts as a leveraged play as aluminum prices continue to rise over the long term. However, like the iPath Pure Beta ETN, the fund hasn't quite caught on with investors. Individual leaders in the space like Norsk Hydro (OTCBB:NHYDY), Alcoa (NYSE:AA) and Alumina (NYSE:AWC) could make better choices based on liquidity and pricing strength. The trio all trade for forward P/E's less than 17. (For related reading, see An Inside Look At ETF Construction.)

The Bottom Line
As both industrial production and economic growth returns, aluminum could be the best way to play that surge. While the short term may be rocky, investors can use those dips to play the metals rosy future. The previous picks, along with Century Aluminum (Nasdaq:CENX), make ideal ways to participate in the base metals growing demand.

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At the time of writing, Aaron Levitt did not own shares in any of the companies mentioned in this article.