Estimates of immediate effects on world markets of a hypothetical disruption to Russia’s supply of six mineral commodities

May 18, 2017

The potential immediate effects of a hypothetical shock to Russia’s supply of selected mineral commodities on the world market and on individual countries were determined and monetized (in 2014 U.S. dollars). The mineral commodities considered were aluminum (refined primary), nickel (refined primary), palladium (refined) and platinum (refined), potash, and titanium (mill products), and the regions and countries of primary interest were the United States, the European Union (EU–28), and China. The shock is assumed to have infinite duration, but only the immediate effects, those limited by a 1-year period, are considered.

A methodology for computing and monetizing the potential impacts was developed. Then the data pertaining to all six mineral commodities were collected and the most likely effects were computed. Because of the uncertainties associated with some of the data, sensitivity analyses were conducted to confirm the validity of the results.

Results indicate that the impact on the United States arising from a shock to Russia’s supply, in terms of the value of net exports, would range from a gain of \$336 million for titanium mill products to a loss of \$237 million for potash; thus, the overall effect of a supply shock is likely to be quite modest. The study also demonstrates that, taken alone, Russia’s share in the world production of a particular commodity is not necessarily indicative of the size of potential impacts resulting from a supply shock; other factors, such as prices, domestic production, and the structure of international commodity flows were found to be important as well.

Citation Information

Publication Year 2017 Estimates of immediate effects on world markets of a hypothetical disruption to Russia’s supply of six mineral commodities 10.3133/ofr20171023 Elena Safirova, James J. Barry, Sinan Hastorun, Grecia R. Matos, Alberto Alexander Perez, George M. Bedinger, E. Lee Bray, Stephen M. Jasinski, Peter H. Kuck, Patricia J. Loferski Report USGS Numbered Series Open-File Report 2017-1023 ofr20171023 USGS Publications Warehouse National Minerals Information Center