28 February 2022 – European Union to impose export restrictions on timber, cement, iron and steel from Belarus. 1/3 of global iron ore pellets production affected by conflict. Do major Swiss banks stop transactions for Russian commodities? European nickel and aluminium prices pull away. Markets on the move, but crash sells better.
EU: Export restrictions on wood, cement, iron and steel
The EU has announced further export restrictions against Belarus, which is seen as a supporter of Russia in the conflict between Russia and Ukraine. Exports from Belarus, mainly wood, cement, iron and steel, are to be subject to export restrictions. According to the EU, this is to prevent Russian companies from using Belarus to circumvent sanctions.
Will iron ore pellets become scarce?
At the same time, prices for iron ore pellets, 1/3 of whose global production comes from Ukrainian and Russian production, are expected to rise significantly. The world’s third-largest pellet producer, based in Ukraine, has already declared force majeure due to disruptions in rail and ocean traffic.
Commodity rally likely to continue
Over the weekend, it was reported that major Swiss banks will no longer settle transactions related to Russian commodity deals for the time being. This also indicates that Switzerland will join the EU and US sanctions against Russia.
Russia an important supplier of commodities
Russia is considered an important supplier not only of energy products such as oil, gas and coal, but also of raw materials such as nickel, aluminium and platinum. The restrictions in the financial sector, such as the exclusion from the Swift system, are likely to complicate trade with Russia. Moreover, it is not yet foreseeable how far the West will take the sanctions spiral.
LME: Nickel and aluminium jump again by 5% at the start of trading
Due to the military conflicts on the European continent and concerns about further restrictions in availability, nickel and aluminium in particular shot up at the start of trading (28 February) on the LME, each with jumps of more than 5%.
Markets on the move: Crash sells better though
Even if the mass media like to talk about a crash. Viewed soberly, the figures are at worst a correction. The DAX is down less than 2%, the FTSE MIB is also down less than 2%, the SMI is down less than 1%.
- Russia and United States on par in steel production
- Up more than 5%, nickel and aluminium prices jump
- China limits crude steel production also in 2022
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