Semiconductor and metal markets in new Russian chaos

While the semiconductor industry is apparently bracing for helium shortages because of the Russian crisis, the London Metal Exchange is also showing signs of distress.

The White House has cautioned the semiconductor chip sector about the prospect of shortages of different chipmaking resources.

This includes helium gas, supply delays of which is unavoidable in the aftermath of the Russia-Ukraine crisis.

Chipmakers now source part of their components from both Ukraine and Russia. Though the war itself does not cause major distress, the industry is suffering from the U.S. and EU widespread sanctions against Russia.

As a result, North America’s deposits of rare gas, which is also required to power MRI scanners, is now the focus for some greedy investors.

War is benefitting some, who are hard hitting against the Russians for invading Ukraine.

Metal in limbo

The London Metal Exchange nickel price jumped more than 110 percent on March 8 to USD 101,351 a tonne, hitting a record high after rising more than 76 percent on Monday.

The unexpected increase in nickel prices is likely to be caused by two factors. First, Russia, a significant producer, was barred from the LME due to financial sanctions.

The inability of the LME to provide nickel resulted in a substantial supply shortage. According to data, Russia’s supply accounted for around 9.3 percent of world nickel ore output in 2021, while Russia’s production accounted for more than 23 percent of global refined nickel output.

After Russian imports were prohibited, the nickel market’s liquidity dropped dramatically, giving the bulls an edge.

Second, global nickel stockpiles are already low, with LME-registered warehouse nickel inventories plunging nearly 70% to 83,328 tonnes since April of last year.

Due to a lack of supply, market activity drives its price higher, signifying more price volatility and the opportunity for speculators to profit.

Greedy investors are seemingly happy with the war, are they?

Photo: Mordor Intelligence