The Strategist

FT: Global car industry is facing shortages of magnesium from China

10/20/2021 - 08:24

Worldwide car production could come to a halt as early as next year as China experiences significant supply disruptions of magnesium, a key ingredient in the creation of aluminium alloys used in cars.

According to the Financial Times, the energy crisis in China has forced authorities in Shaanxi province to close 35 of 50 magnesium smelters about a month ago. The rest were told to halve production to save energy.

Shaanxi is one of China's key magnesium producing regions, and China accounts for about 80% of global production of the metal.

Last week two producers of aluminium billets, US-based Alcoa and Canadian Matalco, said they were running out of magnesium and the situation could cause supply disruptions.

European prices for magnesium have already reached an all-time high due to the magnesium shortage. Over the past month they rose by 75% and crossed the mark of $9,000 per tonne.