Russia and Ukraine: clash causes greater instability in commodity prices in 50 years; for the World Bank, the effects of the war remain until 2024

Roberta Souza
27-04-2022 20:46:18
in Economics, Business and Politics
Russia, Ukraine, World Bank Photo: Reproduction by Murat Gocmen, available on the Adobe Stock website

War between Russia and Ukraine affects economies around the world and World Bank predicts even more intense rises in prices

The consequences of the conflict in Eastern Europe, between Russia and Ukraine, continue to appear and should last until 2024. According to the World Bank's report on the Commodities Market Outlook, the instabilities and shocks seen in food and fuel prices around the world can cause a risk of stagflation.

According to an article by Maytaal Angel published on the CNN Brasil website on Tuesday, April 26, the World Bank said, during its first general and comprehensive study of the effects of the war between Ukraine and Russia – which was the topic of conversation between Brazil and the United States – on the commodity markets, that the planet is going through the biggest shock of values in the sector since the 70s.

According to World Bank statements, the impact of the war between Russia and Ukraine is increasing due to restrictions on the fuel, food and fertilizer market, further increasing inflationary pressures across the globe.

For the World Bank, rises in global prices could be radical

Regarding measures to be taken in view of the context generated by Russia and Ukraine, Indermit Gill, World Bank Vice President for Equitable Growth, Finance and Institutions, stated: “Monetary policymakers should seize every opportunity to increase economic growth. and avoid actions that harm the global economy”.

In this sense, the World Bank predicts, as a result of the clash between Russia and Ukraine, an increase of more than 50% in energy prices this year. For the next two years, 2023 and 2024, prices are expected to decelerate. In agriculture and the metals sector, values are expected to rise by around 20% in 2022.

The two European countries have a strong presence in the world market

It is worth mentioning that Russia is the largest exporter of natural gas and fertilizers in the world, and the second country that most exports oil. Together, Russia and Ukraine account for nearly a third (⅓) of world wheat exports, 80% of sunflower oil exports and nearly 20% of corn exports. 

Since February 24, the date on which Russia's attacks on Ukraine's territory began, both the production and export of these and other commodities have been compromised.

Steel rising: affected by the conflict between Russia and Ukraine, steelmakers in Brazil increase product prices, which can reach an increase of up to 10%

Due to the conflict between Russia and Ukraine, the world market has been affected in several ways, one of them being the increase in the price of steel. Thus, Brazilian steelmakers have also followed international steel values. According to experts in the field, Gerdau's rebar prices in Brazil have increased from 6% to 9%. Companhia Siderúrgica Nacional (CSN) will carry out increases from 8% to 10%, until the beginning of April at the latest. So far, Usiminas has not released any changes, but it is likely that it will follow the same path.

Gerdau's addition follows a strongly reduced import similarity equation, above 20%, compared to break-even levels of 5%. Just this week, a report was published by BTG Pactual in which analysts Caio Greiner and Leonardo Correa stated that long steel values were lower compared to parity for a long time, which shows that demand conditions remained weak. To understand everything about this subject linked to the conflict in Eastern Europe, click here and read this other article from the CPG in full.

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Roberta Souza
Petroleum Engineer, postgraduate student in Commissioning of Industrial Units, specialist in Industrial Corrosion. Get in touch for a suggestion of an agenda, disclosure of job vacancies or advertising proposal on our portal. We don't receive resumes