Copper Trading Basics — Step-by-Step Guide & Transcript

[00:00] knowing about the metals and commodities. If you can understand the metals in commodities, You can play with the trend you understand with the future options.

[00:18] Along with this you can also trade with the stocks related to commodities. The complete concept of copper and copper related things. What are the factors that impact copper?

[00:31] along with the future options, like, metal stocks, You can play with that stock, Vedanta, Hindalco.

[00:43] Indirectly, copper is used as a raw material. fans companies, stabilizer companies, use copper.

[00:55] their raw material cost increases, and the profit decreases. So, you need to understand the commodities. commodities like these.

[01:09] you can understand the economy and the stocks related to them. if you learn one concept here,

[01:21] you will be able to get clarity in different routes. sometimes, a stock will fall without any news. If you look at it, you will see that the stock has fallen because international prices of metals have fallen.

[01:34] So, the stocks and themes you invest in So, I am covering the important concepts related to metals and commodities. We talked about the basic elements related to commodities.

[01:48] What are the different commodities? How to trade them? Then, first we covered gold and then silver, later we covered crude oil. Let's first understand the basic details related to copper.

[02:02] Then, we will talk about the important things related to copper trading. Like, you search copper in your trading platform. Let's talk about these.

[02:14] When will it grow? When will it fall? How do we understand the stocks related to copper? what should you observe and how to interpret them?

[02:28] Or, if it is growing, how to look at copper positively or negatively? Let's cover all these in detail in today's video. To bring these topics in front of you,

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[02:54] This is a metal. As far as I know, the starting metal used by humans in the starting stages is copper. even now, after steel and aluminium,

[03:07] This is the third largest consuming metal in the world. Because, it conducts electricity easily and has less resistance. So, we see copper in electric wires.

[03:23] the companies listed in the stock market, Can you tell me some names of the companies that are using copper in their stocks?

[03:35] I will tell you the names of the companies that are using copper in their stocks. Copper is a metal.

[03:50] Most of the electronics and machines we use, in building infrastructure, That's why, when the economic conditions of a country are good,

[04:04] infrastructure, housing construction is good, and having a housing boom, Where does copper come from? we get it by recycling it.

[04:17] I sold it to someone in a second hand or a metal shop. and make another one. Every metal is called an ore.

[04:32] Ores are different metals that have different types of ores. These are found underground and extracted by digging. iron ores, gold ores, steel ores,

[04:48] But, these are not seen as metals. But, when you see an ore, it is in a crude form. So, it is important to refine it.

[05:04] To mines, it is important to have mines. I will tell you why I am telling you this. Chile, Peru, Congo, China and even in the US,

[05:19] But, where are the top copper ores? In future, at any point, or if there are floods in Chile,

[05:32] then the copper mining in Chile will decrease. if copper mines reduce the ore production, So, if copper supply in market is reduced,

[05:47] So, if something happens in Chile, Traders and even the investors, There are multiple aspects here.

[06:01] and copper ore production decreases, if the global copper prices increase, If the global copper prices decrease,

[06:15] Mostly, the mining and production are done at a same place. we thought there are more mines in Chile, But, the largest producer in the world,

[06:30] But, where the production is done, We should pay attention to China, Like, the iron ore is cleaned and brought out as copper.

[06:46] Because, there is a lot of electronics made, So, China is the largest producer in terms of copper, So, if there is a crisis in China's economy,

[07:00] then the copper prices will fall. We get updates related to China. If there is any problem in China,

[07:12] If Demand stays like that and then prices should increase. and they are consuming more. when both are equal.

[07:24] copper from outside the country coming into china will decrease. so supply will also increase. if China's economy is getting impacted by some reason,

[07:38] But, today we are talking about copper, But, if the Chinese, think that pollution is increasing, if they want to stop them,

[07:52] if we make such statements, If they make statements about the impact of production, The prices of the metals will increase.

[08:05] if you trade in copper or copper related stocks. One is, if copper increases, it will increase, copper will increase and they decrease.

[08:18] Because, copper is a raw material for them. I am a wire selling company. When I am buying copper at a certain point,

[08:32] it costs me 200 rupees to buy copper. If I add all the other things, it costs me 600 rupees. Here, I am selling my wire for 1000 rupees.

[08:44] I will get a profit of 400 rupees. But, if copper price increases by 50% or 70% It will go to 300, 200, even 100.

[08:57] Depending upon copper price or my raw material which has increased. I have kept the stocks on the screen so that you can divide them. We should understand how much copper costs in raw materials.

[09:14] Rest of the 90% is other metals. If copper has 30%, 20%, 40% of their raw material cost, The raw material in copper they are using.

[09:29] We discussed about the mines, production, Let's talk about the stocks. One is Hindustan copper, another is Vedanta, and another is Hindalco.

[09:43] When they get ore, they produce it and bring it out as copper. They also produce copper.

[09:55] whether the price of copper is increasing or decreasing, The reason why the other two don't get impacted is, and Vedanta also do business related to crude.

[10:09] For both, Hindalco and Vedanta. So, if copper is impacted, it will be directly impacts Hindustan copper. So, if copper gets affected, the stock will not move in the same way.

[10:25] The stocks that use copper as raw material, If copper decreases, it becomes positive. Most of the types of wires and stabilizers,

[10:38] even the companies that use electronics, But, copper is the main raw material for those who depend on wires. Phenolex, all of them will have less margins.

[10:53] if copper prices are increasing in the last quarter, since they have bought copper with more money than before, we can understand that their profits won't come in the next quarters same as the previous quarters.

[11:08] If copper prices increase, they will also increase the wire rates. It will not happen that easily. their business and volumes will be at a loss.

[11:22] and they cannot bear the burden, So, I hope you understood the fundamentals of copper and copper related.

[11:34] Here, we will talk about concepts related to copper. If you come to MCX and come to products, After coming to MCX direct website.

[11:48] In this, you can have entire data about copper, which you wanted to know. They say that it is used in electrical and electronic products 39%,

[12:00] Next, industrial materials, consumer, general products, If we observe the copper situation in India, India is importing more than exporting.

[12:15] The future of copper is for 2,500 kilograms. So, if you want to trade a contract, I will show you that.

[12:30] you will see copper April future, and add it, if I want to carry a quantity overnight,

[12:43] It is nearly 2 lakhs. both are of the same margin. So, you see 770 rupees 50 paisa here.

[12:57] Because the size of the contract we are using is 2,500 kg. So, change in one point is equal to 2,500 rupees. If you see like that, each 5 paisa change

[13:13] every contract like this will expire on the last working day of the month. delivery issues will be raised.

[13:25] and roll over to the next month. it will be on the last working day of the month. normally, if it is Thursday or Tuesday,

[13:38] Now, I want to trade in copper. what should I keep in my watch list. and if international are also coming in that,

[13:53] Don't think that I am telling you this newly. I have explained clearly in that. I have explained about dollar index and all these things.

[14:08] As the dollar index increases, the dollar weakens. should we look at copper positively or negatively?

[14:22] So, one thing, when it trades in dollar terms, Or if the dollar weakens, copper strengthens. and if the important resistance or supports related to dollar index breaks,

[14:37] then it should be inversely proportional to copper. One is MCX futures. you will see the US flag and it will appear as COMEX.

[14:52] So, the MCX copper price in India, Like, if the global copper price increases, the copper price in India decreases.

[15:06] On the other hand, we have the copper prices in MCX. the copper price in India increases. Even again, when the price contrasts,

[15:21] the relativity is important. Indian copper prices will react to it. the price of MCX is linked to the global price of copper

[15:37] We should study the price action of global copper prices first It is okay to look at the copper charts related to MCX while taking positions But for trend analysis, we should look at the global charts

[15:52] So it is better to take those as a reference and keep those as trend reference But for positions, we should look at the copper charts in India

[16:04] So whatever strategy you are following, break out, support and resistance and whatever strategies you follow in equity, it will work in the communities Because there is nothing to target or manipulate here.

[16:19] The prices that are increasing and decreasing globally should react in parallel So if the trend starts once, it will continue for weeks If the trend starts once, it will continue for weeks

[16:32] So manipulation is less here and price action and other aspects So whatever strategies you have studied and practiced in equity markets try to paper trade those strategies in the communities

[16:46] So when you say communities, you should believe in price action You should not believe in the data built in the OI data and futures and options And another thing, when I showed you the options here

[17:01] When I said copper, you should not trade options unnecessarily, If you see at the options to trade, if you think copper is increasing or decreasing So when you only have to go with options, remember this caution and alert

[17:16] If the options you took increase and become either in the money or out of the money So those who want to play mostly will play with futures Usually in crude oil, gold and silver, liquidity in options is less in these

[17:30] But in other options, based metals, I don't see strong liquidity as of now Because of the spread, when you want to trade based metals in options Friends, I hope we talked about the whole copper related topic

[17:47] and wind off the basic concepts related to the complete commodity and complete this course with questions related to equity

[18:01] There are some topics related to commodities and currency And we will move to the fundamental analysis series after completing the questions related to F&O and equity series

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[19:02] Jai Hind!