By Elena Savelyeva
(ria.ru) - Washington is urging Brussels to ban Russian palladium and titanium. The EU has not yet decided to do so, since these materials are strategically important. The aviation and nuclear industries are highly dependent on titanium, and palladium is needed for microchips and automobile catalysts. Will politics prevail over economics this time, too?
Limiting supplies
As Bloomberg clarifies, the proposal was voiced at a meeting of deputy finance ministers of the G7 countries in the US capital. The Americans have already refused to buy Russian titanium, but continue to buy palladium.
Norilsk Nickel accounts for 40% of world’s palladium production. In addition, Russia is the third largest producer of titanium after China and Japan, with a share of six percent. VSMPO-Avisma Corporation controls about a quarter of the global market for products made from this metal.
Facing supply shortage
Russia supplied a third of titanium used by the Boeing Corporation, almost 50% of European Airbus, and almost 100% of Brazilian Embraer.
Last year, supplies to the United States decreased fivefold (to $47 million), but Europeans continued importing (at a level of almost $250 million), notes Alexey Ravinsky, CEO of Zapusk Group.
"The sanctions will primarily hit the high-tech industry of France, Germany, Great Britain (aircraft manufacturing, space, automobile industries). While London is able to replace Russian titanium by expanding the development of deposits in Canada and Australia, other countries like Germany and France will have to look for other, more expensive suppliers," points out Svetlana Sazanova, Deputy Head of the Department of Institutional Economics at the State University of Management.
As for palladium, the majority of the EU supply comes from Russia. Any bans will result in an acute shortage of raw materials for catalytic converters, adds Pyotr Chuvakhin, associate professor at the Department of Legal Regulation of the Fuel and Energy Complex at MGIMO MFA.
Already in short supply
Of course, Europe can try to reorient itself to South Africa, Zimbabwe or Canada. But their supply capacities are limited, and in the short term they will not compensate for the lost import volumes, Chuvakhin emphasizes.
"China is the leader in titanium [production] at 110 thousand tons per year, or 46% of world’s supply. But almost all of it is used on the domestic market. Japan (40 thousand tons, 17% of world’s supply) is also unable to quickly increase shipments to Europe," says Vadim Petrov, a member of the Intersessional Financial Advisory Group (IFAG) IOC UNESCO.
Price hike and deficit
The market has already reacted to the news: palladium has risen in price by almost 25%, exceeding $1,240 per troy ounce for the first time this year. According to analysts, the proposed sanctions will raise prices by another 50% with corresponding consequences for the industry.
Production lines will stop. Aircraft production will be delayed for 6-12 months.
Palladium can theoretically be replaced by platinum, but this is associated with technological difficulties and increased costs. Expanding the processing and recycling of metals also requires time and investment, Petrov says.
Due to anti-Russian sanctions, the Western economy is already far from being in the best shape, deindustrialization has begun. Energy-intensive industries have shrunk by 10% - 15%. The largest countries are experiencing a decline. According to Eurostat, from July 2023 to July 2024, industrial output in the eurozone decreased by 2.2%, in the EU - by 1.7%.
Hence, new restrictions may mean new economic difficulties and recession for the continent.
