Russia and Ukraine: negative consequences on automotive and raw materials

Russia e Ucraina: conseguenze negative su automotive e materie prime thumbnail

The invasion of Ukraine by Russia puts the entire planet in crisis, and one of the sectors that has already begun to suffer the consequences of the ongoing conflict is the car industry. If on the one hand, gas and oil prices risk exceeding the historical records recorded in recent weeks, on the other hand the war between Russia and Ukraine could involve some car plants in both countries but above all the procurement of raw materials for the manufacture of vehicles.

The first problem that will affect consumers is the price of gasoline and diesel. As Russia is one of the world’s great oil powers, the military operation in Ukraine is already having an impact on the price of oil. A barrel of Brent reached the price of 104 euros on Thursday, the highest since 2014, after undergoing a 7% increase, which could make petrol and diesel become even more expensive in the coming weeks.

Russia is also the second largest producer of natural gas in the world and Europe’s largest supplier, so the procurement of this fuel in liquid form (LNG), which is used by some vehicles as a fuel, could impact the market. It is therefore not surprising that the price of gas has skyrocketed in the last few hours. The Title Transfer Facility (TTF) which is based in the Netherlands and is considered the most important market in terms of volume, so much so that it is taken as a price reference at a European level, ensures that on Thursday, the same day as the invasion, the price of gas rose up to 60%, touching 144 euros. However, it is not the maximum reached, given that last December the cost reached 200 euros.

Auto industry and conflict Russia Ukraine: the problem now is on raw materials

Russia is the world’s second largest producer of aluminum, a material used to make cars, and its price has increased by about 15% this year. Shares of Alcoa, one of the largest producers of aluminum, were up 31% in 2022. Russia produced 3.8 tons of aluminum in 2021, about 6% of world production. The war between Russia and Ukraine could cause the price of this material to rise in the coming weeks.

auto industry russia

Same goes for the palladioa rare metal of great value thanks to its physicochemical properties that Russia has as one of its largest producers worldwide with 40% of the market share. In the automotive industry it is mainly used for the production of catalysts and batteries for electric and hybrid cars. The price of palladium has risen significantly in recent months and Thursday after Putin ordered the invasion of Ukraineincreased by more than 7%, reaching its maximum cost since August last year, which now places it above that of gold.

Putin’s decision to attack Ukraine provoked intervention by Europe and the United States, which imposed severe trade sanctions on Russia that will affect the normal development of its economic and industrial activities. Renault, Stellantis e Volkswagen (but not only) they could be the car manufacturers most affected by the foreseeable lack of supply of components given their presence in the Russian market. We explain more about the impact of the war between Russia and Ukraine on car manufacturers in the following article.