Procurement markets

The assumed baseline scenario for the first half of 2022, with regard to uncertainties from the war in Ukraine, has been confirmed in hindsight. Overall, we have only recorded a few physical bottlenecks on the procurement side in DB Group. In many markets, however, there is still an imbalance resulting from strong demand and an additional supply shortage due to the Covid-19 pandemic and the war in Ukraine. In addition to the continuing highly volatile commodity markets, we are observing extremely high price dynamics in the construction and logistics sectors.

Against the backdrop of the war in Ukraine, the Federal Government’s climate-protection efforts and the targeted structural change in the energy sector are becoming increasingly important. Dealing with the planned simultaneous phase-out of nuclear power and coal could cause further price momentum, particularly from 2023 onwards. Until then, it is very probable that prices for electricity, coal and crude oil will rise further, and supply bottlenecks may occur. There is currently no foreseeable end to this development. In the long term, however, cheaper sources of energy should become available following the successful transition to renewable energies.

In addition to rising raw material prices, prices for work-in-progress and finished products are also rising. Furthermore, companies are concerned about higher manufacturer prices over the medium term as a result of rising labor costs. In this case, there is the risk of a wage-price spiral, which could also have an impact on DB Group.

By the end of 2022, it is expected that the difficult environment will start to ease due to a slightly declining but still high level of demand and a shortage of key products such as semiconductors and raw materials (like iron ore, crude oil and paper).