What supply chains are being choked off by war?
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What supply chains are being disrupted by the war?
It is not just oil. Supply chains from aluminum to helium are getting choked off by the war. From Marketplace, I'm Sabri Beneshour, in for David Brancaccio. Three cargo ships were hit in the Strait of Hormuz today. Reuters says they were hit by unknown projectiles.
How is the conflict affecting the helium and aluminum supply?
There are also reports that Iran laid a small number of mines in the strait days ago, prompting the U.S. to bomb several Iranian mine-laying ships. All of this underscores the fact that this critical passage is basically shut down and not just for oil and gas. Chris Rogers is head of supply chain research at S&P Global and is here to talk about it. Good morning. Good morning. So, you know, we know about oil not getting through. We know about natural gas not getting through the Strait of Hormuz. What else besides energy is getting blocked off or disrupted right now? a very broad range of materials.
What impact do supply chain disruptions have on global prices?
So we're watching particularly aluminium, which requires electricity to be produced. We've been particularly watching some of the noble gases, so that includes principally helium. they produce and export around one third of the world's helium. And that's really important for the electronics sector. We're also watching plastics and the materials used to make them. So this is a full range, a full menagerie of different petrochemicals, for example, ethylene glycol, which has a number of different uses, including in the automotive industry. For natural gas, for example, a fifth of global supply has been taken off the market. How bad are these disruptions for all of these other products that you mentioned?
Whilst it's a fifth of natural gas, for a lot of these materials, it's anywhere between a third and 40%. So taking that much out has really two effects. Firstly, there's the price effect, of course, shortage of supply. But second of all, of course, that shortage of supply means that for certain buyers and for a lot of those materials, They're going to Asia for Asian manufacturers. So in the example of helium, for example, the US and Europe produce their own. That could cause significant disruptions. And I think an important point is that however long the conflict lasts, it will take at least that long to recover. A few days ago, Korean lawmakers were warning that the supply of memory chips was threatened by the war.
What does war with Iran have to do with the global memory chip supply chain? Yes, I think the first point to make is that the memory chip sector was already in a situation of shortage. And that's largely because a lot of the production of the chips that are used in regular devices like smartphones and computers and cars and industrial machinery is all requires memory. So already the big producers of memory in South Korea, including Samsung Electronics and SK Hynix, were already running behind demand. At the end of the day, South Korea is the biggest exporter in the world of memory chips. Depending on what type you're talking about, it's anywhere between 40% and 50% of global production. So that's another area that's going to be shut in.
How does the war affect the memory chip supply chain?
It sounds like this is touching products that affect everybody. But are there countries or regions in particular that are suffering the brunt of these supply chain disruptions more than others? I think many of the Asian countries, Japan, South Korea, the ASEAN region, are going to feel more disruptions to their supply chains. And it's not just on an inbound basis, so what they're buying from the region. It's also what they're selling to the region as well. The Middle East area, specifically the Gulf Cooperation Council, accounts for around 3% of consumer food. It's particularly important for Japanese manufacturers. The region accounts for around 10% of their automotive exports. And then as a secondary area, we expect to see European consumers and European exports have challenges as well.
Chris Rogers is head of supply chain research at S&P Global.
Which regions are most impacted by these supply chain issues?
Thank you so much. Thanks for having me.
Some TSA screeners haven't been showing up to airports around the country. They aren't getting paid because of the partial government shutdown.
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Chapters
6 chapters
1
What supply chains are being disrupted by the war?
0:01–0:17
2
How is the conflict affecting the helium and aluminum supply?
0:17–0:53
3
What impact do supply chain disruptions have on global prices?
0:53–3:10
4
How does the war affect the memory chip supply chain?
3:10–4:07
5
Which regions are most impacted by these supply chain issues?
4:07–6:05
6
What are the implications of a government shutdown on TSA operations?
6:05–6:20