Ukraine War Poses a Threat to EU Industry (RaboResearch)
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The Ukraine war has sparked another supply chain crisis, just as pandemic-related disruptions had started to ease.
Europe depends on Russia, Ukraine and Belarus for its energy imports, but also for some chemicals, oilseeds, iron and steel, fertilizers, wood, palladium and nickel, amongst others.
Especially the energy dependency is a vulnerability, now that Russia is demanding ruble payments for its exports. It is unlikely that Europe would be able to fully replace Russian gas in the short term, whilst most of the Russian oil and solid fossil fuels could be replaced.
Besides energy goods, disrupted supply of pig iron and several other iron and steel products, nickel and palladium will likely have the largest impact on EU industry.
EU supply chains could also be distorted via war-related production disruptions in third countries. The EU could face challenges in importing e.g. electronic circuits from third countries, as these require inputs such as nickel and neon gas sourced from the warzone.
Germany and Italy are relatively vulnerable to the crisis because of their relatively large industrial sectors, strong reliance on Russian energy, and in case of Italy strong reliance on Russia and Ukraine for certain iron and steel imports and gas in its total energy mix. READ MORE
