A temporary slow down in magnesium production may lead to the next global material shortage, particularly for businesses reliant on metal products.
China, which supplies 87% of the world’s magnesium, said it will lower production of the element in a bid to reduce its power consumption in response to the country’s current energy crisis.
Magnesium – which is integral in the production of aluminium, iron and steel production – requires an energy-intensive process to extract it from ore.
Now a coalition of European trade bodies, including steel association Eurofer and the European Association of Metals, has written to the European Commission warning that the continent will run out of magnesium stocks by the end of November if no action is taken.
It says magnesium shortages will have “far-reaching ramifications” on industries including construction, packaging and automotive.
Import costs for the metal have drastically increased in recent months, rising from around $2,000 per metric tonne, to between $10,000-$14,000.
Global supply chains are heavily reliant on China for the metal, with 95% of Europe’s magnesium being sourced directly from China.
The group of trade bodies said the move has created an “international supply crisis of unprecedented magnitude”, and further warn price rises mean it is “almost impossible” for European companies to produce or source magnesium-containing materials at a viable level.
The coalition stated: “With the European Union almost totally dependent on China for its magnesium supply needs, the European aluminium, iron and steel producing and using industries, together with their raw materials suppliers, are particularly impacted.
“This will have far-reaching ramifications on entire European Union value chains, including key end-use sectors such as automotive, construction and packaging."
The coalition is calling on the EC and national governments to urgently work with the Chinese government to “mitigate the short-term, critical shortage issue as well as the longer term supply effects on European industries”.
While the US is less reliant on China for its magnesium, the country’s manufacturers are facing similar supply chain challenges due to the shortages.
The largest US aluminium billet maker, Matalco, warned it would have to reduce its output due to the supply difficulties. Meanwhile, the US’s largest raw aluminium producer, Alcoa, expressed concerns about the magnesium scarcity to Bloomberg.
Tom Giddings, general manager of the Aluminium Packaging Recycling Organisation, told Supply Management the issue has forced greater adoption of recycling.
Giddings said: “The supply chain difficulties being experienced by numerous markets worldwide has been well documented.
“With regards to aluminium packaging, the shortage of virgin material is just one of several factors facing the industry that is contributing to a challenging environment for manufacturers.”
However, Giddings said, UK packaging manufacturers were mitigating the shortages by using “record-breaking” levels of recycled materials, which he said was “pivotal to keeping the system moving”.
A temporary slow down in magnesium production may lead to the next global material shortage, particularly for businesses reliant on metal products
China, which supplies 87% of the world’s magnesium, said it will lower production of the element in a bid to reduce its power consumption in response to the country’s current energy crisis.
Magnesium – which is integral in the production of aluminium, iron and steel production – requires an energy-intensive process to extract it from ore.
Now a coalition of European trade bodies, including steel association Eurofer and the European Association of Metals, has written to the European Commission warning that the continent will run out of magnesium stocks by the end of November if no action is taken.
It says magnesium shortages will have “far-reaching ramifications” on industries including construction, packaging and automotive.
Import costs for the metal have drastically increased in recent months, rising from around $2,000 per metric tonne, to between $10,000-$14,000.
Global supply chains are heavily reliant on China for the metal, with 95% of Europe’s magnesium being sourced directly from China.
The group of trade bodies said the move has created an “international supply crisis of unprecedented magnitude”, and further warn price rises mean it is “almost impossible” for European companies to produce or source magnesium-containing materials at a viable level.
The coalition stated: “With the European Union almost totally dependent on China for its magnesium supply needs, the European aluminium, iron and steel producing and using industries, together with their raw materials suppliers, are particularly impacted.
“This will have far-reaching ramifications on entire European Union value chains, including key end-use sectors such as automotive, construction and packaging."
The coalition is calling on the EC and national governments to urgently work with the Chinese government to “mitigate the short-term, critical shortage issue as well as the longer term supply effects on European industries”.
While the US is less reliant on China for its magnesium, the country’s manufacturers are facing similar supply chain challenges due to the shortages.
The largest US aluminium billet maker, Matalco, warned it would have to reduce its output due to the supply difficulties. Meanwhile, the US’s largest raw aluminium producer, Alcoa, expressed concerns about the magnesium scarcity to Bloomberg.
Tom Giddings, general manager of the Aluminium Packaging Recycling Organisation, told Supply Management the issue has forced greater adoption of recycling.Giddings said: “The supply chain difficulties being experienced by numerous markets worldwide has been well documented.
“With regards to aluminium packaging, the shortage of virgin material is just one of several factors facing the industry that is contributing to a challenging environment for manufacturers.”
However, Giddings said, UK packaging manufacturers were mitigating the shortages by using “record-breaking” levels of recycled materials, which he said was “pivotal to keeping the system moving”.