Log in Open account
Singapore

How to trade copper: a quick guide

Commodities
Saxo Be Invested

Saxo Group

Copper is called the "king of green metals" because of its usage in multiple applications- from batteries, electrical traction motors, solar PV technologies, wind turbines, and not least the electrical grid required to deal with the electrification of the world. In this guide we provide some examples of how to invest and trade copper, while highlighting some of the key drivers dictating the price.

Here are some of the main influences that can affect the price of copper:

  • Supply and demand dynamics: The fundamental principle of supply and demand plays a significant role in determining copper prices. Increased demand for copper, particularly from industries focusing on electrification, transmission, electronics, and EV's can drive prices up. The green transition has become an increasingly important driver behind copper demand growth, occurring at a time where miners are struggling with higher input prices from fuel, construction material and labour, as well as lower ore grades requiring more materials to be dug out of the ground to retrieve the copper. Also, rising regulatory and start-up costs for new projects have led to a prolonged period of mismatch between increasing demand and inelastic supply.
  • Weather and natural disasters: Extreme weather events like hurricanes, floods, and earthquakes may significantly disrupt copper mining and transportation infrastructure. This can affect supply negatively and in turn drive up prices.
  • Global economic conditions: Copper is widely used in construction and manufacturing, so its price is sensitive to changes in global economic conditions, not least in major economies, such as China and the United States.
  • Monetary policy: The policies of the US Federal Reserve significantly influence the price of commodities, including industrial metals such as copper. If interest rates rise, this can cause a price negative period due to destocking, while the opposite may be the case when interest rates fall.
  • Investor sentiment and speculation: Like other commodities, copper prices can be influenced by investor sentiment and speculative trading in commodity markets. Factors such as geopolitical tensions, trade disputes, and macroeconomic policy decisions can affect investor perceptions and lead to price fluctuations.
  • Green transformation: The global transition towards renewable energy sources and sustainable technologies is driving a significant increase in demand for so-called green metals, not least copper, often called the “king of green metals” given its use in multiple clean energy technologies. In addition, increased demand for power, increasingly also from the focus on AI will lift transmission, and with that, demand for copper towards expanding the grid.
Start trading commodities with Saxo today

So how can you actually trade this popular industrial metal? Here are a few ways:

  • Exchange-traded Funds (ETFs) or Commodities (ETCs): One way to gain exposure to copper is with copper ETFs (or ETCs). Copper ETFs are investment funds that either track the price of copper, mostly through an underlying investment in copper futures contracts, or a basket of major mining companies. Investing in ETFs provides exposure to the price movements of copper or copper miners without the need to directly trade futures contracts or own individual mining stocks. Just like equities, copper ETFs are traded on major stock exchanges, making them easily available.
  • Copper miners: Another, more indirect, way to gain exposure to copper prices is to invest in copper miners. It is worth noting that no pure copper miner exists; they always mine something else such as gold, silver, or other industrial metals. Investing in mining companies or ETFs that hold a basket of mining stocks provides exposure to copper prices. However, these investments carry operational risks and may exhibit higher volatility compared to copper itself.
  • Copper futures and CFDs (options available, but not that liquid):  A third way to invest in copper is through futures or CFDs, which are the most direct and most complex ways to trade them. Trading copper futures or contracts for difference (CFDs) involves higher risk due to leverage. While these products offer opportunities for speculation, they also require careful risk management to mitigate potential losses. One High Grade copper futures contract has a contract size of 25,000 lbs, and based on a price at say USD 4.2 per pound, the contract’s value is USD 105,000. As it is a leveraged product, the buyer or seller of such a futures contract has to provide less than USD 4,500 as collateral, leaving the owner of the position highly exposed to losses without proper risk management. CFDs track the futures price with the main difference being the ability to trade smaller quantities than the 25,000-pound futures contract.

The reddish-orange metal is indeed a favourite industrial metal, not least because of the previously mentioned green transition. Now that you understand the factors that influence the price of copper, and the ways to trade copper, you need to figure out if it’s a commodity that is right for you. The only way to do that is to consider your tolerance for risk, and time horizon, as well as your personal financial goals. Before making any investment, always be sure to keep yourself well informed with the latest market news and insights.

Practice trading commodities with a Saxo demo account today

Quarterly Outlook

01 /

  • Macro Outlook: The US rate cut cycle has begun

    Quarterly Outlook

    Macro Outlook: The US rate cut cycle has begun

    Peter Garnry

    Chief Investment Strategist

    The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
    Read full article
  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

    Read full article
  • Equity Outlook: Will lower rates lift all boats in equities?

    Quarterly Outlook

    Equity Outlook: Will lower rates lift all boats in equities?

    Peter Garnry

    Chief Investment Strategist

    After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto...
    Read full article
  • FX Outlook: USD in limbo amid political and policy jitters

    Quarterly Outlook

    FX Outlook: USD in limbo amid political and policy jitters

    Charu Chanana

    Head of FX Strategy

    As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...
    Read full article
  • Commodity Outlook: Gold and silver continue to shine bright

    Quarterly Outlook

    Commodity Outlook: Gold and silver continue to shine bright

    Ole Hansen

    Head of Commodity Strategy

    Read full article
  • FX: Risk-on currencies to surge against havens

    Quarterly Outlook

    FX: Risk-on currencies to surge against havens

    Charu Chanana

    Head of FX Strategy

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo...
    Read full article
  • Equities: Are we blowing bubbles again

    Quarterly Outlook

    Equities: Are we blowing bubbles again

    Peter Garnry

    Chief Investment Strategist

    Explore key trends and opportunities in European equities and electrification theme as market dynami...
    Read full article
  • Macro: Sandcastle economics

    Quarterly Outlook

    Macro: Sandcastle economics

    Peter Garnry

    Chief Investment Strategist

    Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p...
    Read full article
  • Bonds: What to do until inflation stabilises

    Quarterly Outlook

    Bonds: What to do until inflation stabilises

    Althea Spinozzi

    Head of Fixed Income Strategy

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ...
    Read full article
  • Commodities: Energy and grains in focus as metals pause

    Quarterly Outlook

    Commodities: Energy and grains in focus as metals pause

    Ole Hansen

    Head of Commodity Strategy

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
    Read full article

Disclaimer

 The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Trading in financial instruments carries risk, and may not be suitable for you. Past performance is not indicative of future performance. Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region

Singapore
Singapore
Products & pricing
Platforms
Accounts & service
General
Other
Legal

Losses can exceed deposits on margin products. Please ensure you understand the risks.

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.