Russia-Ukraine Conflict — 5 Important Commodities To Get Hit Brutally

The war that is going on in Ukraine known as the “Russia-Ukraine Conflict” or “Russo-Ukrainian War” is threatening the already stretched supply of the important commodities. It is a fact that Russia and Ukraine might only account for a meager proportion of imports of the major manufacturing nations such as the US and Germany. But the former duo are the essential suppliers of energy and the raw materials for several crucial supply chains.

You might have known by now why and when the conflict began. In this article we will discuss the top five commodities that will brutally be hit in this war and you can anticipate to see in the Russia Ukraine conflict news.

1. Energy

Several European countries are much dependent on Russian energy especially gas via several vital pipelines and this might have badly coated their approach to the crisis. The dependency on Russian gas has been suggested as the sole reason Europe has been reluctant to eliminate Russia from “SWIFT”, the international payments system, for instance, although it is worth mentioning that the Germans have indefinitely suspended the new Baltic gas pipeline Nord Stream 2.

However, at this moment a complete suspension of Russian gas flows is unlikely, but small disruptions will possess significant impact. The gas reserves throughout the world are pretty low owing to the disastrous Coronavirus pandemic and energy prices are already rising high, impacting both the industry and the consumers. Gas and oil prices are likely to increase as a consequence.

2. Food

Ukraine and Russia are the key suppliers of a wide variety of agricultural goods to several regions including the Middle East and Asia while the Russia-Ukraine Conflict will potentially upset the global trade flows. They account for over a quarter of the trade in wheat in the world, nearly a fifth of the corn sales and 80% of the sunflower oil exports.

The conflict is already babbling through the agricultural sector. Some of the top crop traders like the Bunge Ltd. have been pressured to shut down in the region, while the world’s biggest wheat importer, Egypt has canceled its tender a couple of days before after they drew a lone offer of the French grain.

3. Transport

In the aftermath of the Covid-19 pandemic, global transport has already severely disrupted and the war is sure to create more issues. The transport modes that seem to be affected are rail freight and ocean shipping. While rail carries a very small proportion of the complete freight between Europe and Asia, it has played a vital role during the latest transport disruptions and is prospering steadily.

Now the trains have been rerouted away from Ukraine and the rail freight experts are optimistic that the disruptions will be retained to a minimum. Nevertheless, countries such as Lithuania are anticipating to see their rail traffic affected severely by the sanctions against Russia.

The rising oil prices owing to the war are a headache to shipping, usually. The freight rates are already immensely high and would rise even further. Additionally, cyber attacks might also target the global supply chains. As trade is mostly dependent on the online information exchange, this might have a far-reaching consequences if the chief shipping lines or the infrastructure are targeted.

4. Metals

Ukraine and Russia lead the global production of several metals like iron, copper and nickel. They are also mostly involved in the manufacture and export of other essential raw materials such as platinum, palladium and neon. Feats of approvals in Russia have heightened the price of all of these metals. Palladium is utilized for everything from mobiles to dental fillings and automotive exhaust systems. By the end of last year, the prices had soared over 80%. The prices of copper and nickel have also increased that are used in building and manufacturing respectively.

It has also been seen that the US, Britain and Europe aerospace industries largely depend on Russia for the supply of Titanium. Recent information states that Airbus and Boeing have already approached their alternative suppliers. We can expect potential shortages and disruptions for all of these materials and thereby threatening to cause an increase in the prices for a plethora of products and services.

5. Microchips

Throughout the last year, that is in 2021, there was a wholesome shortage of microchips and it was a major problem. Some of the analysts have been predicting that this problem would loosen in 2022. However, the latest Russia-Ukraine Conflict might make them pessimistic.

As a part of the approvals towards Russia, the United States has been continuously threatening to discontinue Russia’s supply of microchips. When Russia and Ukraine are the chief exporters of platinum, neon and palladium that are used in the production of microchips, it is evident that there would be even more shortages of microchips. The alternate sources might be able to supply the global markets but before that they would require long-term investments.

Currently the chip manufacturers possess an excess of two to three week’s inventory. However, any prolonged disruption in the supply caused by the military action in Ukraine will severely impact the production of the semiconductors and the products that are dependent on them, including the cars.

Not only this, the global financial markets are about to see a great negative impact owing to this war.