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Impact of Russian Invasion on Precious Metal Trade


Impact of Russian Invasion on Precious Metal Trade

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The invasion of Ukraine by Russia persists as various nations enforce sanctions and prominent global corporations withdraw from Russian territory. These increasing penalties, all implemented to economically pressurize Russia for their aggression, are severely impacting many of Russia’s key industries. Regrettably, several of these crucial industries involve the export of significant materials.

Russia stands as one of the leading global providers of valuable metals, with nickel being one of their primary exports. Nickel plays a crucial role in battery production, stainless steel manufacturing, and various other products. The halt in Russia’s exports has led to a drastic rise in nickel pricing, exceeding $100,000 per metric ton on the London Metal Exchange today, resulting in a temporary suspension of nickel trading.

As per Ole Hansen, the head of commodity strategy at Saxo Bank, who spoke with CNBC, the substantial escalation in nickel prices is exacerbated by existing global market tension stemming from ongoing supply chain challenges.

“The current market volatility is quite risky as it is predominantly fear-driven rather than being dictated by supply and demand forces,” remarked Hansen.

Prior to the disruption in Russia’s supply chain, commodity investors assumed no interruptions, leading many to try shorting their metal holdings. With the Russian supply now cut off, these investors find themselves in a precarious situation.

“With a major supply channel from Russia suddenly severed, especially in the metals sector, investors are now left with uncovered short positions that urgently need to be resolved,” stated Hansen.

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