Going long when anticipating price increases and going short when expecting price declines can result in profits, depending on the direction of the market and the effectiveness of your trading strategy. Copper prices are mostly driven by commercial industry demand and the rate of supply by copper-producing countries. Useful indicators for copper prices include company stocks that play a key role in copper consumption and copper production. Other useful indicators are indices of commodities that are required to mine copper, like energy commodities (oil). Comex copper is a copper futures product traded on the Chicago Mercantile Exchange’s (CME) futures market.
- It’s also important to keep up to date with any news or data releases that could move the price of copper.
- Copper trading capitalises on the market’s volatility and liquidity, offering opportunities for profit through speculation and price fluctuations.
- But unlike precious metals, copper is available in greater quantities, is cheaper and is not considered valuable enough to be used for currencies.
- Trading on futures exchange is entirely legitimate but you must be familiar with all terms and conditions and deposit a substantial amount of money.
- It is believed that Copper is the first metal of mankind and has been in use since 9000 BC.
- More, a March 2020 research paper from Copper Alliance shows an expected increase in global copper demand, more specifically, an annual growth rate of approximately 9.9%.
What are useful indicators for copper trading?
However, unlike currencies or other financial assets, storing and transporting metal can be expensive. In addition, there is a risk that copper could be seized by the government in case of a severe shortage of base metals. This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information.
Copper futures are standardized contracts enabling traders to buy or sell a specified amount of copper at a predetermined future price. Serving as a global benchmark for copper prices, these contracts are crucial for price mitigation and risk management. Copper futures are traded nearly 24 hours a day, 6 days a week, offering ample trading opportunities. Copper futures trading can be a profitable venture for those who understand the market and develop solid trading strategies.
Short-term Market Predictions
This growth is attributed to the increasing adoption of electric vehicles and green technologies, which require substantial amounts of copper. Stay on top of upcoming market-moving events with our customisable economic calendar. Copper is primarily mined in countries like Chile, Peru, and China, with significant reserves also found in other parts of the world. Copper is a crucial commodity with a broad array of applications in industries like construction, technology, and manufacturing.
Meanwhile, refined copper production (the copper form that actually hits markets) is expected to jump nearly 3% this year as smelters expand capacity, difference between git github gitlab and bitbucket especially in China. At face value, this sounds bearish for prices, as more metal available should ease scarcity. The ICSG’s latest biannual forecast calls for a 289,000-ton surplus in 2025, more than double last year’s surplus. If that surplus materializes, it would mark the third straight year that supply outstrips demand, a clear recipe for price pressure. Some ETPs carry additional risks depending on how they’re structured, investors should ensure they familiarise themselves with the differences before investing.
How Do Copper CFDs Work?
With so much pressure on producers, it can only be a matter of time before supply discipline really starts to take hold. Fastmarkets lithium carbonate pricing in China, Japan and Korea has recently fallen to its lowest level in four years. That market has propped up the sector, where mills have largely struggled to return profits in the past couple years. A ramp up in Chinese domestic coal output and mild Asian winter have combined to reduce demand for seaborne coal at a time of strong supply.
71% of retail client accounts lose money when trading CFDs, with this investment provider. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money.
The last thing you want to do is to ignore the market, and start losing money rapidly. If you’re looking for Forex simulator a trustworthy broker that provides the services you require, you’ll need to do some research to find the right one for you. Some important factors to consider include costs, trading platforms, customer service, and security.
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An alternative way to gain exposure to copper is through the shares of companies in the copper industry. This could be those involved in the exploration, extraction, development, and production of copper, such as Turquoise Hill Resources, KAZ Minerals and Glencore. While most futures do have an expectation that the physical copper will be delivered, there is the possibility to settle the contract in cash or roll it over into the next month.
- Conversely, economic downturns often result in a decline in copper prices as construction and infrastructure projects are put on hold.
- When the copper market is trending, it constantly reaches higher highs or falls to lower lows.
- Copper futures come in various types, including mini and micro contracts, catering to different trading capabilities.
How can I trade copper futures?
The outcome of these services is inherently determined by your individual skill level and ability to perform within the trading requirements and objectives outlined for each service separately. Clients are strongly advised to thoroughly understand the requirements of the services before signing up for any. As your business overcomes these obstacles, be sure to, if at all feasible, safeguard your profits.
These should continue to help to offset the weakness from the building and construction sectors in China. Copper prices have been volatile since the beginning of the year with this volatility mostly driven by tariff risks and China’s uncertain economic recovery. Despite the above aggregate gains, physical copper supply continues to hit bottlenecks. Not all copper is created equal, and a lot of the new mine output is concentrate that still needs smelting. Concentrate shortages have already pushed treatment charges for smelters into negative territory, an unusual situation signaling that smelters are scrambling to secure raw material. The continuous pricing also creates the opportunity to perform technical analysis atfx trading platform over the longer term.
They are not intended for distribution or use in any location where such distribution or use would contravene local law or regulation. CFDs also allow you to go long or short, enabling you to benefit from both rising and falling markets. Additionally, copper CFDs provide access to global markets without the logistical challenges of physical delivery. Another thing that you will have to pay close attention to is emerging markets and the demand coming from them, especially China.
China now imports 60% of global copper ore and produces over 45% of refined copper. Once you’ve opened your position, you can monitor the profit or loss of your copper trade in the ‘positions’ section of our platform. However, if you invest in copper shares or ETFs instead, you could only open a long position – taking advantage of upward momentum over a longer-time frame. The relationship between a commodity and a stock isn’t always set in stone, so it’s important to do your research and asses how copper impacts the price of stocks in the industry.
How to trade copper
Downside risks to our copper outlook include trade negotiations taking longer than expected with the trade war dragging on and reduced policy stimulus from China. Upside risks revolve around potential cuts in refined copper production amid continuing tightness in concentrates. Reflecting the tightness in concentrates, copper concentrate treatment charges have reached record lows. The drop in treatment charges is not only a reflection of the tightening concentrates market, but also of a rapid expansion in copper smelter capacities in China.
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