The world’s top automakers face disruption from tight global supplies of magnesium, as China’s power crisis threatens availability of the key component used to make aluminum, Germany’s association of metals producers WVM said on Tuesday.
European magnesium stocks have been particularly affected by the lack of supplies from China, which has a near monopoly on the magnesium market, the association said in a letter to the German government. The worst part of this shortage is about to come, it noted.
“It is expected that the current magnesium inventories in Germany and respectively in the whole of Europe will be exhausted by the end of November 2021,” the letter said.
Magnesium is used for a range of products, especially aluminum alloys, which are used in several auto-parts from gearboxes and steering columns to seat frames and fuel tank covers.
China, which is Europe’s main magnesium supplier, has ordered roughly 35 of its 50 magnesium smelters to close until the end of the year to conserve power supplies.
What makes the shortage a pressing issue is that there are no substitutes for magnesium in aluminum sheet and billet production.
“Thirty-five per cent of downstream demand for magnesium is auto sheet — so if magnesium supply stops, the entire auto industry will potentially be forced to stop,” Barclays analyst Amos Fletcher said in a report quoted by the Financial Times.
According to Reuters’ columnist Andy Home, the growing shortage of both silicon and magnesium suggests that a downstream hit may shortly be following the upstream smelter hit.
The WVM called on Germany’s government to start talks with China about increasing magnesium supplies to Europe, and to press the European Union to return magnesium production to the Old Continent.
“With a supply bottleneck of this proportion, massive production losses are threatened in the entire aluminium value-addition chain in sectors such as the automobile, aircraft, electro-bicycle, construction, the packaging industry and engineering,” the association said.
The problem has already reached North America. Canada’s Matalco Inc., which produces aluminum billet, told its clients last week that magnesium availability had “dried up”, and if the scarcity persisted it would have to curtail output and ration deliveries as soon as next year.
(With files from Reuters)
Invest in this magnesium stock – MLYF Western Magnesium! 👍🏼
Invest in this magnesium stock – MLYF Western Magnesium!
Western Magnesium is about to change the the world with a green Magnesium/Metal manufacturing process. It couldn’t happen at a better time. Ticker symbol: WMG