The Ukraine war fuels global inflation. However, although Russia is a leader in the production of many industrial metals, their prices have been falling since the outbreak of the war. This could be an advantage for German industry if there weren’t other problems.

The economic consequences of the Ukraine war for the West are most evident in the case of oil and natural gas. Here Russia is one of the two most important producers in the world. Deliveries have only slowed slightly since the outbreak of war at the end of February, but the constant fear of a delivery stop or trade embargo is causing prices to rise. Accordingly, a barrel of oil currently costs 115 US dollars, 22 percent more than on February 23, the day before the Russian invasion. Natural gas has even increased in price by 82 percent.

But the two raw materials are a big exception. Prices for many other resources, especially base metals, are even lower today than they were before the war. Palladium fell the most. The price of the metal used in the automotive industry for catalytic converters fell by 21.4 percent. Platinum fell 15.3 percent, aluminum 14 percent and copper 6.5 percent. Only nickel (6.3 percent) and zinc (2.1 percent) increased in price among the most commonly used industrial metals. Outside the metals sector, the price of wood fell 36.9 percent.

This is astonishing given that Russia is one of the world’s leading producers of all these commodities. For palladium, the country is in second place, just behind South Africa with a world market share of 40 percent. In the case of aluminum, Russia is the most important exporter with a 10.1 percent share of the world market. In the case of platinum, it occupies second place behind South Africa. Copper and zinc production Russia ranks 8th in the world respectively. Depending on the type of wood, Russia also occupies between 2nd and 6th place.

The FOCUS Online guide answers all important questions about pensions on 135 pages. Plus 65 pages of forms.

The fact that the world market prices for many of these products are still falling is mainly due to China. The Asian billion dollar empire is one of the most important importers of industrial metals. They are processed here in countless factories into cars, electronic products, houses, rails and machines. But production falters. Most recently, China had to completely seal off cities like Shanghai again because of its rigorous no-Covid policy. During these lockdowns, production facilities also close, which in turn require fewer raw materials from abroad. Official government data show that China imported fewer industrial metals in April than a year earlier.

There are also smaller reasons that play a role in the price development. The US dollar, which has recently strengthened, means that prices remain high despite falling rates. That sounds paradoxical, but what is meant is that prices only fall when calculated in US dollars. However, if it costs a company in a country more to convert its local currency into US dollars than before, a lower metal price in US dollars can also lead to higher costs in a local currency. The demand then falls accordingly. And third, the global economy is unlikely to recover as strongly as expected this year, leading to an excess supply of many metals – even if Russia supplies less.

The inflation rate in Germany is higher than it has been for 40 years. FOCUS Online therefore asks: your everyday life consists only of savings? You really have to spend every penny and are constantly looking for ways to make a living cheaper? We want to tell your story. Please write to us at Please briefly describe your situation to us in an e-mail and also tell us when we could contact you by phone in the next few days. Thanks very much!

This development is actually good news for German industry. After all, cheaper raw materials mean that production is also becoming cheaper. And since there is now an order backlog that could only be processed in the record time of 4.5 months, there are also decent earnings in store. But: The favorable metal prices are overshadowed by a lot of bad news. A low purchase price does not mean that the corresponding goods can also be delivered quickly. This not only applies to metals, but increasingly to intermediate products that are shipped from Asia, for example. 75 percent of German industrial companies are still complaining about delivery bottlenecks.

In addition, lower metal prices can only compensate to a limited extent for the sharp rise in energy prices for oil, gas and electricity. In a survey conducted by the Ifo Institute at the beginning of May, 73 percent of industrial companies therefore stated that they wanted to increase their prices in the coming months to take account of rising production costs.

Follow the author on Facebook

Follow the author on Twitter