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There’s a semiconductor supply crunch, the cost of tooth fillings is spiking in Japan, sofas in Britain are becoming pricier, and American breweries are scrambling to find enough aluminum cans for their beer. All these economic headaches can be traced back to Russian President Vladimir Putin’s decision to invade Ukraine.

The war in Ukraine has sent shockwaves across global commodities markets as many of Ukraine’s most vital exports grind to a halt under Putin’s war machine and new waves of international sanctions begin shutting off Russian industries from the global markets. Western policymakers are spending the bulk of their time trying to fight rising energy prices and figure out how to wean off Russian oil and gas, not to mention feed the millions of people who relied on Russian and Ukrainian grain. 

But other industries are trying to weather their own supply shocks caused by the war. Russia, and to a lesser extent Ukraine, are something like global superstores, playing key roles in the global production, manufacturing, or export of such vital commodities as neon, palladium, nickel, wood, ammonium nitrate, and aluminum. Beyond higher prices at the gas pumps and economic pressure from inflation, the knock-on effects of Putin’s invasion are beginning to trickle into new and unsuspecting corners of the global supply chain in ways that show the economic reverberations from the war in Ukraine are far from over.

There’s a semiconductor supply crunch, the cost of tooth fillings is spiking in Japan, sofas in Britain are becoming pricier, and American breweries are scrambling to find enough aluminum cans for their beer. All these economic headaches can be traced back to Russian President Vladimir Putin’s decision to invade Ukraine.

The war in Ukraine has sent shockwaves across global commodities markets as many of Ukraine’s most vital exports grind to a halt under Putin’s war machine and new waves of international sanctions begin shutting off Russian industries from the global markets. Western policymakers are spending the bulk of their time trying to fight rising energy prices and figure out how to wean off Russian oil and gas, not to mention feed the millions of people who relied on Russian and Ukrainian grain. 

But other industries are trying to weather their own supply shocks caused by the war. Russia, and to a lesser extent Ukraine, are something like global superstores, playing key roles in the global production, manufacturing, or export of such vital commodities as neon, palladium, nickel, wood, ammonium nitrate, and aluminum. Beyond higher prices at the gas pumps and economic pressure from inflation, the knock-on effects of Putin’s invasion are beginning to trickle into new and unsuspecting corners of the global supply chain in ways that show the economic reverberations from the war in Ukraine are far from over.

Neon is a prime example. The noble gas is required to manufacture semiconductor chips, which power everything from smartphones and laptops to cars. The gas is a byproduct of Russian steel manufacturing, which is then sent to Ukraine to be purified and in turn shipped to semiconductor producers abroad—during peacetime, that is.

Neon is an “important element in semiconductors, because it’s used in the lithography tools,” said Peter Hanbury, a semiconductor expert at Bain & Company. “These are the most critical part of the semiconductor manufacturing process.”

Around half of the world’s semiconductor-grade neon comes from just two Ukrainian companies, both of which were forced to shutter their operations amid the Russian invasion. One of the companies is based in Mariupol, currently under siege by Russian forces; the other is based in the vital port town of Odesa, another city on Russia’s hit list. 

This has left some of the world’s largest suppliers of semiconductors, already grappling with a supply crunch from the COVID-19 pandemic, scrambling to find alternative sources of the gas. South Korea, a major chip manufacturer, immediately removed its import tariffs on neon, while ASML Holding, a key chip supplier, swiftly moved to secure other neon supplies. 

“ If the situation gets protracted, we are very concerned that its impact on the economy will likely expand,” South Korea’s Finance Minister Hong Nam-ki said last month .

It’s not the first time that Russia’s military advances have rattled the semiconductor industry: In 2014, concerns surrounding Russia’s invasion of Crimea sent neon prices skyrocketing by 600 percent, according to the U.S. International Trade Commission. That spooked major semiconductor manufacturers, which moved to store extra reserves in case of another supply shock and have now stockpiled enough neon to weather the economic storm in the short term. 

“The actions that were taken in response to that crisis are the things that are setting up the industry pretty well to deal with it now,” Hanbury said.

The U.S. mirrors tactics used against China on Russia as war in Ukraine escalates.

Micron, an Idaho-based technology company and one of the largest chip producers in the United States, says it has supplies for the next few months. “Right now, we do not expect any negative impact to our near-term production volumes, but this is an evolving situation,” a spokesperson for Micron said. “We have sufficient supply for the next few months and are taking steps to secure additional supply for a longer period.”

For smaller companies that weren’t equipped with these reserves and are thereby more vulnerable to price and supply shocks, the loss of Ukraine’s neon output has been more painful. If the war drags on and vendors’ existing neon stores are depleted, experts say these disruptions could come to be felt across the entire semiconductor manufacturing industry. If vendors run out of their inventory and struggle to secure alternative neon supplies, “it could sort of bring a halt to chip production to different extents,” said Gaurav Gupta, a semiconductor analyst at Gartner, a technology research firm. “That could be the worst-case scenario.”

It’s not just neon, either. Fears of market disruptions also pushed up the price of palladium, a platinum-like metal, to a seven-month high in March—a spike that has been felt most clearly across the automobile industry, where it is used in catalytic converters. In Japan, these skyrocketing costs have had a knock-on effect for dentists: The price of tooth fillings, which use palladium, is spiking, causing a government panel to approve price hikes for such procedures covered by national health insurance plans. More than one-third of Japan’s palladium imports came from Russia in 2021; globally, Russian mines account for nearly 40 percent of palladium production .

The price of nickel, another metal used in stainless steel and battery production, has also spiked because of the war. Russia is the fourth-largest nickel producer in the world, especially through its mining giant Nornickel. In March, fears of supply shortages sent the metal’s price shooting up by 110 percent  and pushed the London Metal Exchange to halt trading. 

Still, some analysts say the actual supply of nickel may not dip as dramatically as other commodities caught in the crossfire of the war and ensuing sanctions—despite price fluctuations from nervous traders. “As far as we are aware, the reality of the situation is that for the moment, there has been no impact or very minimal impact, really, on the utilization of that Nornickel material around the world,” said Andrew Mitchell, the director of nickel research at Wood Mackenzie. 

American breweries are also feeling an economic pinch , as both Russia and Ukraine are among the world’s top suppliers of barley, a key ingredient in beer. Russia is also a top producer of aluminum, and supply disruptions from the war and aftershocks of the global pandemic have left breweries scrambling to find stable and affordable supplies of aluminum cans to package their beer. 

In the lumber market, uneasy commodities traders and Western companies’ efforts to shed Russian suppliers in anticipation of more sanctions on Moscow are shaking up prices before there’s even any drop in lumber supplies. British furniture suppliers are warning customers that their sofas and other furniture are becoming more expensive as the war drives up the price of timber. By April, European timber prices increased 35 percent from prewar prices, driven in part by skittish markets in expectation of supply reductions that have yet to take shape. (In the United States, meanwhile, the price of lumber—timber that has been cut and processed— dipped amid a red-hot real estate market cooling off as mortgage rates go up.) 

Although Russia accounts for nearly a quarter of the global softwood lumber trade, more than half of its exports go to China, which has maintained trade relations with Russia throughout the war, according to Fastmarkets RISI, a market analysis firm.

But these price fluctuations are forcing countries to reassess existing export and import arrangements, all part of a trend that is shaking up the contours of the global lumber markets. 

“At a minimum, we’re going to have a big reshuffling of global trade,” said Dustin Jalbert, a lumber economist with Fastmarkets RISI. “That reshuffling of supply—even if there’s not a net impact in terms of actual production—it’s going to be very chaotic as global buyers are trying to detach themselves from Russian supplies.” 

As Russian forces advance into Ukraine’s Donbas region, economists, aid agencies, and big international organizations warn that things could get worse before they get better. 

“ The war is supercharging a three-dimensional crisis—food, energy, and finance—that is pummeling some of the world’s most vulnerable people, countries, and economies,” U.N. Secretary-General António Guterres said in a press conference. “The impact of the war is global and systemic.”

Christina Lu is an editorial fellow at Foreign Policy. Twitter: @christinafei

Robbie Gramer is a diplomacy and national security reporter at

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