Crisis in Ukraine Affecting Metal Prices
On 24th February, Russia invaded Ukraine, sending shockwaves around the world. The West has responded with a barrage of sanctions which are already having major effects on global financial markets, blocking supply chains and leading to dramatic increases in the price of various commodities including nickel, steel and aluminium.
Russia currently produces around 6% of the world's aluminium and around 10% of its nickel. The country is also the world's fourth-largest producer and third-largest exporter of steel. In addition, Ukraine itself is a major net exporter of steel. Both aluminium and nickel have hit record price highs in recent days and are currently around £2,897 per tonne and £21,817 per tonne respectively.
The sanctions imposed on Russia will have huge impacts on prices for many reasons, including deferrals in shipment releases, delays in the establishment of alternative sources and payment delays, among other factors.
Al Munro, a broker at Marex, said that the price of nickel, a key material in stainless steel manufacturing, was 'benefitting from the threat to Russian production' and mentioned that the market was already tight as demand rose with the reopening of economies after lockdowns imposed due to the COVID-19 pandemic. Commerzbank analyst Daniel Briesemann said that the Ukraine crisis was 'continuing to hang over metals prices' and that stockpiles of nickel were falling.
Steel prices are expected to rise sharply in Europe as the sanctions will lead to further shortages in a market that is already short on supply. The demand for semi-finished steel is predicted to increase, pushing export prices higher and impacting domestic steel prices. It may take several months until the entire supply chain can be reinstated. Costs of insurance and freight are also likely to rise, resulting in further increases in metal prices.
It is a difficult and troubling time for the citizens of Ukraine and also for the citizens of Russia, who will be most affected by the economic sanctions that have seen the ruble drop in value to record lows. The repercussions of Russia's invasion are being felt around the world, as can be seen by the soaring prices of metals and other commodities. Throughout these uncertain times, BS Stainless will continue to supply premium-quality materials at the most competitive price. Please subscribe to our newsletter and follow us on Facebook, Twitter and LinkedIn for updates.