I was always wondering: How do you buy a commodity (for example oil or aluminum) on an exchange for a "real" purpose.
It seems like most resources on the net deal with how to "trade" them in a broker's account and speculate on prices. But what if you want to build a product out of copper or aluminum - how can you use the exchanges to get a good price on those commodities and have them shipped to your factory?
The entire point of these exchanges is to deal commodities for delivery and in the past investors and speculators who didn't want delivery got into some trouble when they forgot to sell out of their futures positions before the maturity date. Indeed even the great (if you like that kind of economics ;) ) Keynes did this accidentally once whilst trading his Cambridge college's funds and they ended up filling the college chapel with grain whilst they worked out what to do with it! This story may or may not be true but always bears repeating: from the Economist.
These days the majority of people trading commodities are investors and speculators and even the majority of end users only use the commodities markets to fix a price and then take delivery directly from a producer rather than through the market. There are still, however, traders on the markets trading contracts that are stipulated as being "for delivery". The majority of these are agriculturals or non-precious metals and you have to have a relationship with your broker, and probably the exchange, to trade these as there are extra costs and considerations attached to for delivery contracts; particularly the cost of delivery to the end point where you need them.
Incidentally, although precious metals contracts are normally not for delivery this is because even people who want to hold the physical commodity want their broker to store it for them for security reasons. I'm not sure that I would want a pile of gold under my bed...
You can buy "real" commodity on a commodity exchange. Every exchange has rules for every traded commodity. The rules include also the day of delivery (usually few days, weeks after last trading day) and the assigned warehouse, where you should deliver, or pick up your commodity.
So even, if the majority of trades are hedges/speculation (you can see it on open interest column on the price list), there are still some left with real delivery.
The system is not designed for that, and you really wouldn't want to do that... even if you could. You will want a specific alloy of the material. Unless you have a hot mill or a foundry, you will certainly want someone else to extrude it into basic material shapes such as beam, channel, sheet, wire, etc. from which you will be crafting.
So even if you had gondola cars of the physical metal sitting in your yard, you would still want to sell that at market, and use the proceeds to buy the correct forms in the correct alloy.
