Shock in commodity and metals markets as fears of Russian supply risks grow

The rocketing rise in global energy prices, and fears of a scarcity of supply, caused a shock in the commodity and metal markets in light of the escalation of events related to the war in Russia and Ukraine, amid increasing speculation of an increase in sanctions against Moscow by European countries and the United States of America.

The White House said it was discussing with allies a possible embargo on Russian oil, which has sent oil prices soaring and geopolitical risks rising following Russia’s attack on its smaller neighbor.

According to Bloomberg news agency, the rise in energy prices means an increase in costs for manufacturers, including metal smelters, which exacerbates the threat to supplies, as commodity traders face sanctions imposed on Moscow.

As investors flock to safe havens amid the escalating war in Ukraine. Gold futures for April delivery rose 1.84%, or $36.2, to $2002.80 an ounce for the first time in more than 18 months.

Palladium prices have also reached an all-time high due to exacerbated fears that the exports of Russia, which is one of the major producers of the metal, may be hampered as a result of the sanctions imposed on the country after its invasion of Ukraine.

Russia accounts for 40% of all production extracted from the metal, which is often used in the catalytic converters of gasoline cars.

Russian President Vladimir Putin said again on Sunday that the war would continue until Ukraine accepted his demands and stopped resisting, dimming hopes of a negotiated settlement.

Copper prices, used to make power cables and wires, rose 1.5 percent to $10,835 per ton on the London Metal Exchange, exceeding its previous record level in May, according to Bloomberg news agency.

Russia’s copper exports account for about 3.3% of global production, according to JPMorgan & Chase. Copper supplies were facing growing pressure globally before President Vladimir Putin ordered his army to invade the neighboring country.

The world’s shift towards renewable energy sources and electric transportation faces an increase in copper demand in the coming years, making the market sensitive to the turmoil.

Goldman Sachs said in a note Friday that the copper market was “underestimating the risks to supplies from Russia”, as the reaction of prices to the risks of supply shortfalls from the invasion of Ukraine has been relatively limited. The bank’s expectations indicate that prices will reach a record level of up to 12 thousand dollars within 12 months.

The price of copper rose 1.1% to $ 10796 per ton at 10:07 am Shanghai time, while the price of nickel rose 16% to $ 33,650 per ton, its highest level since March 2008. The price of aluminum rose 3.9% before the increase narrowed 3.2% to $ 3,973 per ton.

Aluminum achieved an all-time high, with a price of $4,000 per ton, while nickel prices rose to more than $33,000 per ton, and palladium prices recorded a new peak. It is noteworthy that Russia is responsible for 6% of the world’s aluminum production.

The price of nickel also rose to a level above 37,000, which is the highest level in 15 years.

As for global wheat prices and their impact on these developments, they have risen to approach their record levels, as the raging Russian war in Ukraine cut off supplies coming from one of the major bread chains in the world, and is expected to impede the cultivation of crops this season, threatening an almost inevitable crisis in the supply side for consumers around the world. the scientist.

Futures contracts on the Chicago Board of Trade rose to its daily limit for the sixth session in a row, rising 7% to $12.94 per bushel (27.25 kg), rising above its massive 41% increase last week, the biggest rise in more than a decade. 6 decades.

Commodity prices from energy to minerals and crops have risen since the start of the Russian invasion, raising inflationary pressures around the world and exposing monetary policy to new challenges.

Wheat prices are at their highest since the 2008 global food crisis, and look set to break that level this week. Food costs have risen to higher levels than ever before, according to the United Nations, and are expected to increase further to exacerbate the problems of importers and push more people to fall into hunger.

The ongoing war has halted shipments of wheat from one of the world’s most important farming regions. Ukraine and Russia together account for more than a quarter of world trade of this staple food for bread, to biscuits and pasta. The conflict closed major ports in Ukraine, cutting supply and transport lines. Trade with Russia has also been choked by difficulty dealing with sanctions and increased insurance and shipping costs.

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