The raw materials market is a sector subject to constant development and change. Among the various materials traded on this market, copper is no exception to these sometimes significant variations in its value. Used in many sectors of activity, this material is in full development and appears to be one of the most demanded values on the markets today.
If you wish to buy or sell copper, it is essential to know the state of the market and to identify the most opportune moments to carry out your transactions. In order to help you with your strategy for managing this raw material, DeftHedge offers you its SaaS solution to help you manage your copper sales and purchases. On a daily basis, our software will facilitate many tasks and help you to optimise all your financial operations.
Why buy copper ?
Among the raw materials listed on the stock exchange, copper is among those most in demand. The purchase of copper can therefore be carried out for your own business or for investment purposes. Choosing copper is a wise choice, and there are various ways to make this investment.
First of all, therefore, you must first determine on which asset you wish to position yourself: physical copper or financial contracts (futures). In order to avoid the risk of theft associated with physical copper, financial contracts such as futures are therefore suitable solutions for your investments in this raw material.
Today there are several types of copper futures contracts on offer on the various world markets.
High grade copper (COMEX)
On the COMEX (New York Commodity Exchange), various commodities are traded: precious metals, gold, silver, copper… On this market, it is possible to invest in cash but the vast majority of transactions are carried out through futures contracts. These contracts are quoted at cents per pound.
Also offered on the London Metal Exchange (LME), copper can be purchased in cash or through futures contracts. On the LME, futures contracts are quoted three months in advance and sold in lots of 25 tonnes. In addition to copper, many other materials are traded on the LME: aluminium, tin, nickel, lead, zinc, steel, strategic and precious metals…
How to invest in copper ?
Once you have chosen the asset you wish to invest in, it is necessary to determine the financial instrument you wish to use for your strategy.
One of the most common ways to invest and position yourself in the copper market is through derivatives and in particular Contracts for Difference (CFDs).
CFDs are dependent on changes in copper prices and can be beneficial or disadvantageous depending on how the value of copper changes between the time of purchase and sale.
Due to the uncertainty inherent in this type of derivative, investments in copper present higher risks.
In addition to CFDs, there are also other investment opportunities in the copper market:
- Exchange Traded Fund (ETF): exchange traded investment funds
- Shares in copper mines: shares of active companies
When to sell copper ?
In order to determine the most opportune time to sell copper in the markets, it is essential to look at several indicators. In order to best prepare your transactions, it is important to consider several indicators :
- The state of world economic growth (particularly the Chinese economy, which is a major consumer of copper)
- The needs of emerging countries
- Supply disruptions
- Level of the US dollar exchange rate
- Metal Substitution
- Necessary components for the production of new technological products
All these elements must therefore be taken into account in your decision to sell copper. You should also take into account that there are places and times for copper trading:
London Metal Exchange: Monday to Friday, 02:02 to 18:59 (Paris time).
New York Mercantile Exchange: Monday to Friday, 00:00 to 23:00 (Paris time)