The Russian war in Ukraine is leading to an upheaval in global trade flows of everything from wood and oil to diamonds and Covid-19 vaccines, causing inflation and forcing buyers to find alternative suppliers, according to an analysis by Trade Data Monitor, the world’s premier source of trade statistics.
The Russian export machine has been mainly geared toward the production of oil and gas, and key industrial commodities. That’s why the biggest impact of sanctions and other measures will be on global fuel prices, which are rising as Russia’s oil and gas exports are withdrawn from global supplies.
At a time when the world needs ever more commodities to fuel the middle class lives of billions of people, Russia had emerged as a top supplier, along with powerhouses like Saudi Arabia and the U.S. In 2021, Russian petroleum exports increased 49% year-on-year to $211.5 billion. The biggest buyers of Russian petroleum in 2021 were China, Netherlands, Germany, South Korea, the U.S., Poland, Turkey, Belarus, Italy, and Japan.
The pattern of consumption of Russia’s fuel exports points to a larger trend. In 2021, China was already Russia’s top trading partner. It shipped $68.1 billion worth of goods to China, up 38.5% from 2020. China now makes up 14% of Russia’s exports, up from 6.7% in 2013. Russia’s top exports to China in 2021 were petroleum, iron ore and copper, wood, and machinery. In the end, the biggest repercussion of the war in Ukraine and subsequent detachment from Western Europe and the U.S. might be in Russia’s rapprochement with China.
The Russian economy is a unique engine, without globally significant consumer manufacturing, but powerful in its capacity to generate fuels, a handful of valuable natural resources, such as wood, gold, and fertilizers, and some industrial goods. Russia’s commodities and metals productions are core parts of industrial supply chains, especially those used in the making of automobiles.
Without this massive commodity sector and its foreign customers, Russia would lose its place as the world’s 11th largest economy. Russia, for example, in 2021 generated around 40% of the world’s industrial palladium, a material used to make catalytic converters for cars and trucks, and semiconductors for computers. In 2021, Russia exported $6.5 billion of palladium, up 1.4% over 2020, ahead of the U.S. ($4.5B), South Africa ($4.1B) and the UK ($3.3B), according to TDM.
But there’s more to the Russia export machine than simply industrial metals. Russia, for example, was the world’s number one exporter of fertilizers in 2021. It shipped out $12.5 billion worth of fertilizers, up 78.4% from 2020. Its biggest buyer was Brazil, which bought $3.5 billion worth, followed by the U.S., China, Estonia, and Finland. The country was also the world’s fourth biggest wood exporter, after Canada, China, and Germany. Russia exported $11.8 billion of wood in 2021, up 42.6% from 2020. Its top customer was China, which bought $3.6 billion worth, followed by Finland, Japan, Uzbekistan, and the U.S.
Russia’s third top export category is precious stones, including gold and diamonds. Its top three buyers in 2021: the UK, the US, and Belgium. In 2021, Russia shipped $15.4 billion of gold to the UK, making up 3% of its total national exports. In 2021, Russia exported $4.5 billion of diamonds, up 39.9% from 2020. Its top customer: Belgium, which bought $1.8 billion worth.
The war is also upending global grain trade. In 2021, Ukraine was the world’s fourth biggest cereals exporter, behind only the U.S., Argentina, and India.
Those exports were split almost 50-50 between corn ($5.9B, up 21%) and wheat and meslin ($5.1B, up 41%). With food prices already increasing 30% in 2021, and inflation biting sound the globe, there’s good reason to worry.
But Ukraine’s export profile is more complicated than its status as the former breadbasket of the Soviet Union. It’s also a key supplier of metals and iron ore, especially to China, meaning that conflict could force up iron ore and steel prices. In 2021, Ukraine was China’s fifth biggest supplier of iron ore. Overall, it was the world’s fifth biggest exporter of iron ore by value, behind only Australia, Brazil, South Africa, and Canada.
A broad network of iron ore mines belong to what is still one of the top metal and mining production networks in the word. It includes roughly 50 iron ore deposits, and has the fifth total reserves in the world. Overall, Ukraine’s top exports in 2021 were iron and steel ($13.9B, up 81%), followed by cereals ($12.3B, up 31%), animal and vegetable fats ($7.1B, up 23%), and iron ore ($6.9B, up 63%), according to TDM.
John W. Miller is Trade Data Monitor’s Chief Economic Analyst, in charge of writing TDM Insights, a newsletter analyzing key issues through trade statistics. John is an award-winning journalist who’s reported from 45 countries for the Wall Street Journal, Time Magazine, and NPR.