Eastern Europe

Writing this report now as an immigrant, I hope everyone is safe; after two years of incredible turmoil, this basic of life has been proven to be the most important.

The number of refugees leaving Ukraine as of March 15 has exceeded 3 million, according to the United Nations, with the lion’s share heading to Poland where the estimated 1.8 million arrivals match the population of Warsaw, the country’s capital and largest city. Most of them are women and children as men have been called to duty and are forbidden to leave the country.

Several scrap yards in the west of Ukraine (close to Lviv) are still operating but scrap inflows are basically non-existent. Сompanies have been exempted from paying taxes and are being asked to support people by paying employees two-thirds of their salary.

The Polish government and public are providing incredible support to the refugees but, with much processing to be done, bottlenecks are occurring in many areas - including in railway transportation from refugee hubs and in the housing market. The National Bank of Poland has increased the interest rate from 2% to 3.5% to support the local currency and to battle growing inflation.

Availability of copper units in the market is now better as the metal is not being exported to Russia; market participants in Slovakia and Poland both report fuller books compared to two months ago.

As for Russia itself, numerous companies have left the market and have refused to have any ties to the country. As of February 28, the Russian ruble was trading at 99.82 to the US dollar compared to 80 rubles to the dollar immediately before the invasion. To stabilize the currency market, the finance ministry obliged exporters to sell up to 80% of the currency starting on the last day of February, which equates to a pre-sanctions estimate of approximately US$ 470 billion a year. Given the current volatility in the dollar/ruble rate, this measure is basically killing the export-import business even without the application of sanctions. Also, the Bank of Russia’s key rate was raised from 9.5% to a whopping 20%. People are queuing at banks and ATMs to withdraw money from their accounts; in the early days of the conflict, they tried to change as much as possible into US dollars before the Central Bank forbade the selling of US dollars to the public.

Russia’s metals industry is operating with limited export-import activity, but many of the purchases are undertaken as an investment rather than as actual consumption so as to get rid of rubles and sink the money into commodities instead. Businesses that have traditionally been very tied to the dollar/ruble exchange rate are stepping away from this model.

In the Russian ports of St Petersburg and Kaliningrad, outbound container bookings are currently unavailable; from Novorossyjsk and Nakhodka, it is still possible to book but only through a very limited choice of one or two shipping lines. Some lines - such as Maersk - are pulling empty containers out of Russian ports and closing their regional offices. Belgium and the Netherlands have announced that they will forbid imports, exports and the transit of Russian cargoes via their territories, meaning that their ports - previously major hubs - will no longer be used for transloading from feeder to ocean-going vessels.