World prices for many commodities have soared to levels not seen since the start of the Russian invasion of Ukraine.
Wheat, sunflower, titanium, aluminium, nickel and hydrocarbons: the two countries play a key role in the global supply of these crucial materials for human food and industrial production.
Russia is notably one of the world’s leading producers of gas and oil, and investors are panicking about possible supply disruptions. For now, economic sanctions avoid the energy sector, but the United States, less dependent than Europe thanks to its national production, is now talking about a ban on importing Russian oil. Russia is the world’s second largest crude oil exporter.
Oil prices approached their all-time highs on Monday, briefly exceeding 130 US dollars (166 Canadian dollars) a barrel for the first time since 2008. The price of gas reached an all-time high in Europe on the same day, at 345 euros. ($440 CAD) per megawatt hour. The European Union imports 40% of its gas from Russia.
“Attic” of the world
Russia, which in 2018 became the world’s leading wheat exporter, is “crucial” for feeding the planet, but Ukraine’s export capacities are also a cause for concern.
The two countries are a “grain basket” for the rest of the world. Ukraine, the world’s fourth largest corn exporter, was on the way to becoming the third largest wheat exporter, behind Russia and the United States, before the crisis.
In Europe, the price of wheat has been soaring since the start of the conflict and reached an unprecedented price on Monday: 450 euros (CA$576) per tonne. Some countries in the region, such as Bulgaria, have taken measures to limit exports; Hungary has even banned grain sales abroad, helping to tighten supply in a market that was already very tight before the invasion.
The cereal supply of several countries dependent on Russian and Ukrainian wheat also raises fears of the worst. “Lebanon is 50% dependent for its food on Russian and Ukrainian wheat. This means that, for some countries, it will be more dramatic than for us, the price increases. Over there, there will be shortages, ”said Christiane Lambert, president of the first organization representing farmers in Europe, COPA-COGECA.
According to the specialized firm Agritel, “it is on sunflower oil that weighs the greatest danger”. Famous for its fields of flowers as far as the eye can see, Ukraine is the world’s leading producer of oilseeds and the world’s leading exporter of its oil.
Metals in demand
The industrial metals “most exposed” to the sanctions of the international community against Russia are aluminium, nickel and palladium, estimates for its part Capital Economics.
The Russian group Rusal is the second industrial aluminum producer in the world. This metal hit a new all-time high Monday on the London Metal Exchange (LME), at US$4,073.50 per tonne.
For nickel, there’s Nornickel Norilsk, run by oligarch Vladimir Potanin. In 2019, Russia was the third largest producer of nickel ore, behind Indonesia and the Philippines, but it is second in refined nickel, behind China. Capital Economics estimates that 7% of the global refined nickel market “could be affected” by the sanctions. However, the metal, which reached a historic high of $55,000 per ton on Monday, is experiencing strong demand on the planet for the production of electric car batteries.
Lebanon depends 50% for its food on Russian and Ukrainian wheat
For palladium, which also hits an absolute record at $3,442.47 per ounce, of which Russia controls 50% of the world market, the automotive industry is also on the front line: it is used for the manufacture of exhaust catalysts. .
Titanium, a metal prized in aeronautics for its lightness and very high resistance, is also an indirect issue in the conflict. The Russian company VSMPO-Avisma, founded in 1941 in the Urals, is the world’s leading supplier to the industry, underlines the general manager of the engine manufacturer Safran, Olivier Andriès, who says he has “a few months of stocks” ahead of him.