Eastern Europe

Additional COVID restrictions are being imposed in the region with the emergence of the Omicron strain.

Effective from December 1, Poland has banned flights to seven African countries and additional quarantine requirements have been set for travellers from outside the Schengen area. The country will also tighten restrictions on the number of unvaccinated people allowed in public places such as restaurants and cinemas, reducing the limit to 50% of full capacity.

Slovakia and the Czech Republic imposed a state of emergency on November 26 for, respectively, 90 and 30 days. And in Ukraine, several regions implemented restrictions a few weeks ago for commuters using public transport whereby unvaccinated people were obliged to take a PCR test every three days.

Copper is in high demand. In Poland, Slovakia and Romania, multiple cases have been reported of scrap suppliers failing to fulfil contracts on time through being unable to collect enough metal. Russian copper consumption is booming and the 15% export tariff has still not led to sufficient local collections, and so scrap imports picked up significantly in September and October. However, the recent LME copper backwardation has led to plenty of disruption and hurdles in securing scrap purchases.

As for the aluminium market, the secondary ingot tariff for exports out of Russia was waived on November 26 and so the market is currently using the momentum to move the metal that has been sitting in warehouses awaiting the tariff cancellation; news of this had emerged in late October, since when there has been little activity. Outside of Russia, aluminium producers are still struggling with the main difficulties of a semiconductor shortage, high silicon prices (although supply tightness has eased a little), slower demand from the automotive industry and rising energy prices.

Energy pressures are gaining ever more attention. In Ukraine, gas and electricity prices have almost doubled while the TGe24 electricity market index is at an historic high in Poland; it has already been announced that household utility bills will be at least 20% higher for 2022. The governments of Poland and the Czech Republic have introduced a project to reduce VAT on electricity as part of a bid to ease pressure on the markets. The Nord Stream 2 launch in 2022 will help ease gas price pressures too.

GDP growth for 2021 is expected to be 4.2% in Russia and 5.3% in Poland, considerably better than the 3.3% forecast in January this year. So despite all the difficulties, the markets have performed well.