Russia-Ukraine war: Brace for more car price hikes as Palladium costs rise
Car prices may soon witness hikes if the ongoing Russia-Ukraine war continues in coming days. According to Bloomberg reports, Palladium has already hit an all-time high on mounting concerns that exports from Russia could be disrupted as a result of sanctions due to the ongoing war. This could lead to worsening of the ongoing global chip crisis as Palladium is a key ingredient for semiconductors to manufacture cars.
Palladium is mostly used in catalytic converters in gasoline-powered vehicles. Russia is one of the largest producers of the rare-earth metal, accounting for nearly 40 percent of all mined production of Palladium.
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According to Bloomberg, buyers are worried about Palladium supplies as most of Europe’s airspace remains closed to flights from Russia. Giovanni Staunovo, a commodity analyst at UBS Group AG’s global wealth management unit, was quoted by Bloomberg saying, “The airspace closure is disrupting exports of Russian palladium. Further price support is likely coming from investor-and-consumer-led buying trying to secure physical palladium. With low above-ground inventories, palladium, which was under-supplied for nine years until 2020, is very sensitive to supply disruption risks."
Spot palladium prices surpassed its previous high in May to climb by as much as 5.3 percent to $3,169.46 an ounce. The price of the metal has gone up by 66 percent already this year.
Earlier, the Federation of Automobile Dealers Associations (FADA) in India had raised concerns that the Russia-Ukraine war will have ripple effects on the auto supply chain. It had said, "Due to the ongoing war, we once again fear the shortage in semi-conductors which will create additional supply-side issues for PVs."
Besides Palladium, there is also growing concerns over supply of Neon Gas, which is used in manufacturing of semiconductors. Ukraine, currently facing Russian aggression, is one of the major suppliers of the Neon Gas.