February 25, 2022

Geopolitical Friction to Create New Supply Disruptions

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The 83rd State of the Fleet Industry video produced by Automotive Fleet (AF) offers an updated look at the state of the fleet market as presented by AF Editor Mike Antich.

🎙Today's topics include:

The anticipated additional disruption of the supply chain due to today’s geopolitical issues will extend today’s supply chain imbalance.
The reason today’s situation in the Ukraine is so important is because most finished metals especially aluminum come from Russia/Ukraine and China, but more so from Russia/Ukraine since the U.S. added tariffs on Chinese finished materials.
If there is a tit-for-tat escalation in sanctions, it can crimp the supply of aluminum. Even before the Russian invasion of Ukraine, there was a 9 to 12 month order-to-delivery time for the time it takes to receive aluminum in bulk.
How will the auto industry be impacted by reduced availability of steel, aluminum, and stainless?
Mills are limiting who gets supply for the purpose of reallocating supply to higher margin customers. Problematic or low margin customers are getting letters from the mills saying they can’t supply metal. This “saved” production is being reallocated to higher-margin customers.
The price of aluminum has had back-to-back increases in the first two months of 2022. Also since October 2021, the price of aluminum is 68% higher.

⏱ Timestamps ⏱
0:00 Intro
1:00 Disruption of Supply Chain Due to Geopolitical Issues
5:18 Escalation in Sanctions
6:33 Reallocation of Supply

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