Russia’s Nornickel on Monday cut its estimate for the global palladium market deficit in 2022 to 100,000 troy ounces due to lower demand from the car industry amid the Ukraine crisis and a slow recovery of the chip market from shortage.

Western sanctions imposed on Moscow after it sent tens of thousands of troops into Ukraine on Feb. 24 have not so far targeted Nornickel, the world’s largest producer of palladium and high-grade nickel.

Nornickel, which accounts for 40% of the global palladium primary production, “continues to deliver metals according to its contract obligations despite logistic obstacles associated with limited availability of international flights” from Russia, it said in its updated market review.

“Russian nickel exports have not been affected, and Nornickel continues to fulfil all contractual obligations,” the miner added.

Nornickel, which accounts for 20% of high-grade nickel production, said excluding Russian nickel from the trade system would be disastrous for the London Metals Exchange and the global nickel market.

The company now expects the global nickel market surplus of 37,000 tonnes in 2022 before it widens to 103,000 tonnes of nickel – mainly of low-grade nickel – in 2023 due to the start of new production capacity in Indonesia.

The palladium market would remain in balance in 2023 as the recovery in the auto demand would be mostly offset by rising supply, the miner added.

In February, the miner forecast a global palladium market deficit of 300,000 ounces and the global nickel market surplus of 42,000 tonnes in 2022.