Danger for car manufacturers: Industry fears aluminum shortage

As of: 10/22/2021 2:43 p.m.

German industry is running out of magnesium: The automotive industry in particular is threatened because the raw material is required for aluminum alloys. Experts warn of a production stop.

By Thomas Spinnler, tagesschau.de

For months, the shortage of chips seemed to be the main production problem for German industry. The auto industry in particular complained of serious delivery bottlenecks. This bottleneck has not yet been remedied, as the next defect threatens to paralyze the manufacturers. The German Metalworkers Association (WM) recently issued a position paper warning of supply bottlenecks for magnesium – an important raw material for the production of aluminum, which is urgently needed in automobile and aircraft construction.

In the course of efforts to reduce its own energy consumption, China has recently drastically reduced the production of magnesium. “With a share of 87 percent in production, China has an almost complete monopoly on global magnesium production,” says the WM paper. China covers 95 percent of the magnesium requirement in Europe, so there is almost complete dependency.

Magnesium cannot be replaced

Magnesium is such an important raw material because it is required for the production of certain aluminum alloys, which are used, among other things, in the automotive industry. In its natural state, aluminum is unsuitable for industry because it does not have the properties required to make automobiles. Between 150 and 200 kilograms of aluminum are used in each car.

There is no substitute for magnesium in aluminum production, emphasizes Amos Fletcher, raw materials expert at the Barclays Bank, in an analysis: “If the magnesium supply ends, the entire automotive industry may be forced to stop production.”

Magnesium is therefore indispensable for the automotive industry. But aluminum alloys are also urgently needed in medical technology, for example for ventilators. There are also numerous uses in the aircraft, construction and packaging industries as well as in mechanical engineering and steel production.

Stocks by the end of November

“This is a huge problem that we are currently facing,” said Tim Stappen, spokesman for the General Association of the Aluminum Industry, Aluminum Germany tagesschau.de. “Companies tell us that their magnesium stocks will only last until the end of November.” Magnesium cannot be stored indefinitely, so companies need regular supplies. “The companies are in the air,” warns Stappen.

“In the event of a supply bottleneck of this magnitude, there is a risk of massive production losses,” says the statement by the Metal Industry Association. “Germany and Europe are therefore particularly hard hit by the supply bottlenecks, since in 2001 the remaining magnesium production was given up as a result of dumped Chinese imports.”

Risky dependency on Chinese imports?

The European Aluminum Association has also spoken out: The current bottleneck is a clear example of the risk that the EU is taking by making its economy dependent on Chinese imports, according to the association. His demand: The EU strategy for a secure supply of industrial metals must be strengthened.

Magnesium has been on a list of critical raw materials for Europe’s industry since 2017. as announced by the World Cup. The metal trade association appealed to the federal government to “urgently initiate diplomatic talks with China” in order to secure supplies for the German economy.

Record prices on the metal exchanges

The rising prices on the commodity exchanges are also increasingly a problem for companies: A few days ago, the price of a ton of aluminum reached more than $ 3,000, the highest level in 13 years. Since then, the prices have fallen somewhat, but the price of the metal has risen by almost 60 percent in the past twelve months.

The price of magnesium has also skyrocketed. According to the “Financial Times”, which quotes the price information service Argus Media, companies recently had to cope with a price increase of around 75 percent to more than 9,000 dollars per ton within a month.


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