I just realized something that many traders overlook – what exactly is copper? It’s not just a metal used in electronics or construction, but also a very attractive trading instrument in the financial markets.

You may not know, but what is copper if not one of the most liquid assets? The global copper market currently has a size of about $309 billion (as of 2023) and is expected to grow to $505 billion by 2033 with an annual growth rate of 5%.

The great thing about this market is that it’s driven by clear factors. China accounts for 55% of global refined copper consumption, mainly due to demand from renewable energy and electric vehicles. Latin America is a major producer, with Chile and Peru together producing 35% of the world’s supply. When you understand what copper is in this economic context, predicting prices becomes easier.

In reality, copper prices are influenced by many factors. The strength of the USD, China’s economic situation, global interest rates, oil prices – all impact the trend. Between 2014-2016, prices plummeted 40% below $2 due to slow growth in China. Then from 2021-2024, they surged to a record high of $5.2 in April 2024 thanks to the green wave.

Current fundamental analysis is also quite optimistic. Although the world is oversupplied by about 162,000 tons in 2024, this figure has decreased from the previous forecast of 467,000 tons. Demand is still expected to remain strong due to infrastructure, green energy, and electric vehicles. Additionally, the Fed is about to start lowering interest rates, which will weaken the USD and support copper prices.

On the technical side, copper prices have been in a strong upward trend since March 2024, rising 22%. Support levels remain solid, and the Stochastic RSI indicator falling into oversold territory suggests a potential rebound.

Now, if you want to trade copper, you have several options. Commodity exchanges like CME and LME offer futures contracts. There are ETF funds like iShares Copper Trust if you prefer a passive approach. Or you can trade CFDs – more flexible, with leverage, but also higher risk.

The key to trading is understanding what copper is in the global economic context, not just as a metal. Keep an eye on supply and demand, China’s situation, Fed interest rates, oil prices. Use both fundamental and technical analysis. Most importantly, manage your risk – know your risk tolerance, set reasonable stop-loss levels, diversify your portfolio.

In fact, trading copper isn’t difficult if you understand the underlying drivers. With positive prospects from green energy and the possibility of the Fed lowering interest rates, this could be a good opportunity to monitor or participate. But remember, the market always has surprises, so always be prepared and flexible to adjust your strategy.