TOKYO -- International prices of nickel and palladium are climbing amid worries about supplies from Russia, a major producer of both metals, in light of the geopolitical turmoil in Ukraine.
If the U.S. and Europe toughen their economic sanctions against Russia's involvement in Ukraine, Russia may respond by cutting supplies of the two metals.
On Monday, nickel -- used to make stainless steel -- traded for about $17,900 per ton on the London Metal Exchange, up 20% or so from the start of March and the highest in 14 months. Russian resource giant Norilsk Nickel accounts for 17% of the metal's global output. Indonesia's ban on unprocessed ores since January has also pushed up the price of the metal.
The price of palladium, a catalyst used to make auto emissions cleaner, has risen to the highest level in 32 months. Russia produces some 40% of the global output. In South Africa, another major exporter, mine workers are staging major strikes.
The impact on Japanese stocks has so far been limited. The Nikkei Stock Average ended at 13,910.16 Monday, closing 49.89 points lower from the end of last week after rising briefly during the day.
At this point, many in the market expect a diplomatic resolution will be reached in Ukraine without an armed conflict.
But "if both sides keep ratcheting up mutual sanctions, the European and Russian economies will slow down, creating a ripple effect globally and weighing on Japanese corporate earnings," says Takeru Ogihara of Mizuho Trust & Banking. Investors may then seek safe haven in the yen, resulting in the currency's appreciation and putting downward pressure on Japanese stocks.