The EU must take immediate action to secure magnesium supply, with stocks on course to run out by end-November, threatening production stoppages across various industries, including steel, European industry representatives warn.
The shortage is being caused by reduced supply of magnesium from China. Due to the Chinese government’s efforts to curb domestic power consumption, supply of magnesium originating there has either been halted or reduced drastically since September.
The EU sources 95% of its magnesium requirement from China, meaning the European aluminium, iron and steel producing and using industries, together with their raw materials suppliers are particularly impacted. This will have a knock-on effect on end-use sectors such as automotive, construction and packaging, says a cross-industry group including steelmakers’ association Eurofer.
The current Chinese supply shortfall has already resulted in record prices and worldwide distortions in the supply chain. Today’s remaining EU magnesium imports are trading at “extortionate prices” of about $10,000-14,000/tonne, up from some $2,000/t earlier this year. This “makes it almost impossible for European companies to produce or source magnesium-containing materials at a viable level,” the group says in a note sent to Kallanish.
“To that effect, our industries jointly call on the EU Commission and national governments to urgently work towards immediate actions with their Chinese counter parties to mitigate the short-term, critical shortage issue as well as the longer-term supply effects on European industries,” the note reads.
Annual global magnesium demand is 1.2 million tonnes, with 87% produced and 39% consumed by China. Europe and North America each consume around 19%. The iron and steel industry accounts for 16% of magnesium usage in Europe. Aluminium alloying has the highest share of 45%, followed by die casting with 33%.
Adam Smith Germany