WORLDWIDE SUPPLY OF NEON DISRUPTED DUE TO UKRAINIAN WAR

Not only will worldwide supplies of wheat, fertilizer, nickel, aluminum, gas and oil be short supply due to Russian sanctions —- so will semiconductors due to a shortage of neon gas produced by Ukraine. That’s right, little Ukraine owns this market and covers nearly 50% of worldwide supplies.

Some 45%-54% of the world’s semiconductor grade neon, critical for the lasers used to make chips, comes from two Ukrainian companies, Ingas and Cryoin, according to Reuters calculations based on figures from the companies and market research firm Techcet. Global neon consumption for chip production reached about 540 metric tons last year, Techcet estimates.

The financial ramifications of economic warfare with Russia is going to be felt by May.

The stoppage casts a cloud over the worldwide output of chips, already in short supply after the coronavirus pandemic drove up demand for cell phones, laptops and later cars, forcing some firms to scale back production.

While estimates vary widely about the amount of neon stocks chipmakers keep on hand, production could take a hit if the conflict drags on, according to Angelo Zino, an analyst at CFRA.

“If stockpiles are depleted by April and chipmakers don’t have orders locked up in other regions of the world, it likely means further constraints for the broader supply chain and inability to manufacture the end-product for many key customers,” he said.

Before the invasion, Ingas produced 15,000 to 20,000 cubic meters of neon per month for customers in Taiwan, Korea, China, the United States and Germany, with about 75% going to the chip industry, Nikolay Avdzhy, the company’s chief commercial officer, said in an email to Reuters.

In case you’re concerned about inflation, do not worry the state of California is going to pay $400 per car per month to cover gas expenses . Printing more money is of course the answer to stop inflation in a fucking clown world.

REMINDER: the US currency reserve status is in danger for first time ever. With Russia demanding payment in Rubles for gas, it’s only a matter of time before the demand payment in Rubles for all of their exports. The ramifications of this, coupled with America’s belligerent actions towards China, could be catastrophic for the dollar. My thesis of a black swan event in the dollar has never been more possible than now. We are seeing it happen and will be able to discern the progress of the Petrol-Ruble in the coming days and weeks. If the Ruble gets back down to 75 per dollar, this would be on par with an American defeat from an economic point of view and might cause some serious FX disruptions.

Gold and oil are my best idea hedges, alongside Australian dollars.