Commodities rally amid fears of shortages after Russia invades Ukraine
Commodities such as aluminium, nickel and zinc have boomed following Russia’s invasion of Ukraine, which has exacerbated long-standing fears of supply shortages and rising energy costs.
Investors fear retaliatory action from any sanctions imposed by the West, after the Russia launched a full-scale invasion of Ukraine in the biggest attack by one state against another in Europe since World War Two.
Wholesale gas prices have soared over 30 per cent amid supply shortage concerns, with Europe dependent on Russia for around 40 per cent of its natural gas.
Three-month aluminium prices on the London Metal Exchange hit a record $3,449 this morning, and were still up 3.8 per cent at $3,428 around midday.
Aluminium prices have risen around 60 per cent over the past 12 months, but the emergence of conflict in the region has deepened investor worries.
Russia produces around six per cent of the world’s aluminium and produces around 10 per cent of global nickel supplies.
Following the instigation of conflict in Ukraine, benchmark prices for nickel have climbed 3.4 per cent to $25,220 a tonne, having earlier touched $25,610 a tonne today, the highest since May 2011. Meanwhile, zinc prices have also risen to $3,615 per tonne.
The commodity markets were already buoyant amid supply shortages, pandemic-driven disruption and rising demand.
Aluminium, nickel and zinc are used for multiple consumer products alongside being valuable materials in electric vehicles.
Commerzbank analyst Daniel Briesemann, said: “Against this backdrop, little attention is being paid to recently published fundamental data. However, they show that the zinc market – alongside the aluminium, copper and nickel markets – was also substantially undersupplied last year.”