The supply of raw materials was hit hardest by the war in Ukraine

The supply of raw materials was hit hardest by the war in Ukraine

As suppliers and buyers attempt to recover from the initial shock of the Russian invasion of Ukraine, it is becoming clear that some delivery method Has been disrupted more than others.

With war now underway and the Russian military now planning a campaign that will last for months or even years, it is necessary to see what material, industrial chemicalsAnd the manufacturing sector will be the most affected if a peaceful solution is not found soon.

Meal

A well-established fact is that both Russia and Ukraine are major supplies of food for the rest of the world. For example, their combined production accounts for 29% of the world’s wheat market and 17% of the global corn market.

So prices are expected to rise for basic foods like bread and pasta, but corn is a Common raw material for animal feed The war is also likely to increase the cost of meat.

Additionally, Ukraine is a major supplier (top five globally) of sunflower oil, barley, potatoes and rye, producing enough food to feed 600 million people.

multiple news agencies are even reporting how Russia is now ‘stealing’ grain and other agricultural supplies and equipment from Ukraine and shipping it home.

Oleg Nivievsky, agronomist of the Kyiv School of Economics, told CNN That “on the eve of the invasion 6 million tons of wheat and 15 million tons of corn were ready for export from Ukraine, most of it in the south of the country.”

As of 5 May, the Ukrainian Defense Ministry estimated that 400,000 tons of grain had already been stolen.

agricultural chemicals

Ukraine is also a major exporter agricultural input material, For example, Ukraine is Europe’s largest producer of ammoniaof which 80% is used compost,

This situation is aggravated by the fact that Russia is clear substitute supplier contribution 24% of the global ammonia marketWith all Providing many other fertilizer raw materialssuch as Phosphate and Urea (17% of the global supply).

Russia too Supplies 20% of the world’s potash, with the other 21% provided by Belarus, which is also subject to trade sanctions with the West. This has resulted in a sharp increase in raw material costForcefully ICIS to expect 43% growth in fertilizers Running costs until 2023.

This is further disrupting the food supply chain. As Susan Maier, Senior Analyst at Healthcare & Chemicals SustainAlyticsreport, “Impact of high fertilizer cost Demand is reduced (estimated to decrease between 5 and 15%) and will result in yield loss as farmers will use less of the produce.

Logistics

One of the least obvious repercussions from the fighting in Ukraine is the impact on logistics in the wider region.

Even before the war began, maritime traffic through the Black Sea was already lower than in previous years as tensions in the region increased. With the fighting relatively close to the large container port of Odessa and the continued threat and sinking of Russian military ships, the risks to using this route are high.

While most goods are transported by ship, over the past 10 years 50,000 trains have delivered supplies and manufactured products over the transcontinental rail link, which was built in 2011. Now rail freight to the region is also low as the regular east/west corridor connecting China to Europe via Moscow is liable for clearance inspection.

ore and mineral deposits

Ukraine has a wealth of metal ores and natural reserves and is The world’s 8th largest exporter of ores and concentrates, among other raw materialsThis includes:

Europe’s largest proven reserves of recoverable uranium

Europe’s second largest reserves titanium ore

2.3 billion tons manganese ore (12% of the global total)

30 billion tonnes of iron ore reserves (world’s second largest)

Europe’s second largest reserves mercury ore

Fourth largest exporter of clay in the world

Ukraine also source For more than 90% of US semiconductor-grade neonA gas that is important for the lasers used in making microchips.

Supply chain for dozens of other metals and raw materials being limited by war, causing serious disruption to producers in the West. As a recent report Deloitte “Russia is a significant source of many of the 35 critical minerals that the U.S. Department of the Interior (DOI) considers important to the country’s economic and national security interests,” notes “including 30% of the world’s supply of platinum-group elements”. (including palladium), 13% of titanium and 11% of nickel.

This list is far from conclusive, and does not specifically include the threat to Europe’s energy supply that remains open for now.

The war has brought rapid changes in many markets as the global economy adapts to this highly uncertain situation. raw material supplier have to work harder and harder for Provide products to manufacturers need them. Such is the depth of the crisis that economists are now viewing the Russian invasion of Ukraine on February 24, 2022, as a turning point in the history of the global economy.

as Ira KalishoDeloitte’s chief global economist concluded, “We’re seeing a disruption in supply chains Tension increased for some commodities and in global financial markets. The war raises questions about the continuation of globalization and the ability of any country to act against the wishes of the international community.


photo Credit: Khusen Rustamov from Pixabay, fancycrave1, andreas gollner, frank barskeAnd pixels

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