- The Russia-Ukraine war could impact the production of key metals for auto and semiconductor supply chains, JPMorgan says.
- The production and supply of platinum, palladium, and neon could all be at risk.
- The analysts said current stockpiles of key materials would last four to six months.
The West's economic sanctions on Russia are leaving a significant mark on the country's economy, but are also ramping up risks to the global supply of key materials needed in the production of automobiles and semiconductors, two industries already rattled by disruptions from COVID-19.
That's according to JPMorgan analysts in a note on Friday, stating that while oil supply has received most of the attention since Russia invaded, a host of other commodities are at risk of disruptions.
"The concern is that the two sectors hit hardest by last year's bottlenecks (autos and semiconductor chips) could one again be slammed," wrote bank analysts in a Thursday note.
In particular, JPMorgan highlighted how the metals market could face renewed pressure as the crisis continues. Production of platinum and palladium could stall, and each are key components to catalytic converters in auto production. The production of neon — an integral ingredient in the making of semiconductors and a major Russian export — is also at risk.
JPMorgan's analysts predict that the current stockpiles of these supplies are "sufficient" for now, and there is a cushion for another four to six months before the absence of Russian supply is felt.
Since Russia invaded Ukraine last week, markets have whipsawed and investors have faced profound uncertainty. A top economic historian said the war could spiral into the world's worst energy crisis since the 1970s.
Oil has spiked and WTI crude was trading at the highest levels since 2008 this week. JPMorgan has predicted that prices could reach $185 per barrel by the end of the year.