War in Ukraine threatens further interference for the supply chain that has been stretched. Ukraine and Russia can only explain a small portion of import major manufacturing countries such as Germany and the US, but they are important suppliers of raw materials and energy for many important supply chains Wheat jumped to the highest level in more than 13 years, expanding a rally that adds to inflation worries throughout the world, because Russian attacks in Ukraine placed a vital source of global supply at risk.
Russian-Ukrainian conflict: five important commodities that will be beaten
1. Energy
Many European countries depend on Russian energy, especially gas through several vital pipes, and this might color their approach to the crisis.
Russian gas dependence has been suggested for European reasons reluctant to eliminate Russia from the Swift international payment system, for example, even though it is better to show that Germany has suspended without the limit of the new Baltic gas pipeline stream 2.
While the complete suspension of the Russian gas stream is not possible at this time, even small disturbances will have a significant impact. Global gas reserves are low because of the price of pandemic and energy that has increased sharply, affecting consumers and industry.
With gas input is important for many supply chains, disruption to such fundamental supplies will have extensive economic consequences. When the gas price first jumped in the fall of 2021, for example, fertilizer plants in the UK were closed because high energy costs made production cannot be maintained. This causes a lack of carbon dioxide, which is very important for everything starting from medical procedures to keep food fresh. Such consequences tend to be enlarged with the increase in oil and gas prices
2. Food
Wheat jumps to the highest level in more than 13 years, extends a rally that adds to inflation worries throughout the world Russia and Ukraine are the main suppliers of agricultural goods rafts to regions including Asia and the Middle East, and conflicts have the potential to increase global trade flows. They take into account more than a quarter of the world trade in wheat, about one fifth of the sale of corn and 80% of the export of sunflower oil.
The conflict has rustled through the agricultural sector. Some popular traders like Bounge Ltd. It has been forced to close in the region, while Egypt – the world’s largest wheat importer – canceled soft Thursday after drawing French wheat bid.
3. Transportation
With global transportation that has been very disturbed after a pandemic, the war can create further problems. Transportation mode is likely to be affected is sea shipping and train delivery Since 2011, the regular rail transport link between China and Europe has been established. Recently, the 50,000 train made a trip. While the rails bring a small portion of the total freight between Asia and Europe, it has played an important role during recent transportation disorders and grew steadily.
The train is now being transferred from Ukraine, and train freight experts are currently optimistic that disturbances will be maintained to a minimum. However, countries like Lithuania expect to see their rail traffic very affected by sanctions against Russia Even before the invasion, shipowners began avoiding the route of black sea shipping, and insurance providers demanded notice of travel like that. Although shipping containers on the Black Sea is a relatively niche market on a global scale, one of the biggest container terminals is Odessa.
If this is cut off by Russian forces, the effects on the import and export of Ukraine can be very large, with potentially drastic humanitarian consequences The increase in oil prices because the war is a concern for more general delivery. The shipping rate is very high and can rise further.
There is also worries that cyber attacks can target global supply chains. Because trade is very dependent on online information exchange, this can have extensive consequences if the key delivery path or infrastructure is targeted. The effect of the ripple from the supply chain cyber attack can be very large.
4. Metal
Russia and Ukrainians lead global metal production such as nickel, copper and iron. They are also mostly involved in the export and manufacture of other important raw materials such as neon, palladium and platinum Fear of sanctions against Russia has increased this metal price. With a palladium, for example, trading prices are currently nearly US $ 2,700 per ounce, up more than 80% since mid-December. Palladium is used for all starting from the automotive and cellphone disposal system to teeth. The price of nickel and copper, which is used in the manufacture and their respective buildings has also been soaring.
The US, European and English aerospace industries also depend on titanium supplies from Russia. Boeing and Airbus have approached alternative suppliers However, the market share and product base of the leading Russian supplier of VSMPO-AVISMA makes it unlikely to be fully diversified from it, with some aerospace producers have signed a long-term supply contract by 2028 For all these ingredients, we can expect potential disorders and deficiencies, threatening to cause price increases for many products and services.
5. Microchips.
The lack of microchip is the main problem throughout 2021. Some analysts have predicted that this problem will increase by 2022, but the latest developments can reduce the optimism As part of sanctions against Russia, the US has threatened to cut the supply of Russian microchips. But this ring is hollow when Russia and Ukraine are the main exporters of neon, palladium and platinum, all of which are important for microchip production.
About 90% of neon, which is used for chip lithography, comes from Russia, and 60% of this is purified by one company in Odessa. Alternative sources will require long-term investment before being able to supply the global market The chip producer currently has an advantage of additional inventory of two to four weeks, but a prolonged supply disorder caused by military actions in Ukraine will greatly affect the production of semiconductors and products that depend on them, including cars.