Europe is concerned about the shortage of Chinese magnesium, on which it depends in many important industries, after fluctuating prices for this metal during the past three months, as a result of production cuts and expectations that this shortage will continue in the future.
The decline in the production of lightweight metal in China, last September, led to an increase in the price of a ton to more than 11 thousand dollars, after its price was about 2000 dollars in recent years.
Although its price had fallen back to around $5,300 by November 13, some manufacturers are still concerned, according to a report by The Economist.
The head of Volkswagen's procurement department said magnesium shortages "will certainly happen", and the leading US aluminum producer, Matalco, warned customers that it may have to ration deliveries next year.
Magnesium is used in dozens of industries, from power tools, to construction supplies, packaging, and laptop computers, to auto and aircraft parts.
China produces about 85 percent of the world's magnesium, and its production reached about 961,000 tons in 2020, the majority of which is from Yulin City in the northern Shaanxi Province.
In September, city officials asked at least 40 producers to either shut down or reduce their production, to cut emissions and meet energy consumption targets, given that the mineral requires high energy to produce and is not environmentally friendly.
The magazine says that to produce one kilogram of magnesium, it needs 4 kilograms of coal.
Under these circumstances, Yulin's production of magnesium in September fell to about 40 percent compared to production in June, which led to an increase in prices.
Although producers there have since increased production, they are still under pressure.
In other regions in China that produce this metal, high coal prices caused power outages, knowing that the problem of power outages suffered in about 19 provinces in recent weeks.
Research firm S&P Global Platts says slowing production in China means about 120,000 tons of production will be lost this year.
Europe is particularly vulnerable, as it gets 95 percent of its magnesium supply from China.
America, on the other hand, does not rely much on Chinese magnesium, uses mostly domestic suppliers to meet its needs, and imposes protectionist tariffs of more than 140 percent on Chinese magnesium.
The US companies "Ford" and "General Motors" said that they use almost no Chinese magnesium in production.
For James Riley of the consultancy Capital Economics, the shortage of semiconductors is the most pressing problem for the auto sector.
But a prolonged decline in magnesium supply can be harmful, and the problem of a shortage of semiconductor chips due to disruptions in supply chains has shown how bad this can be, according to The Economist.
The European aluminum company is concerned that even if production returns to normal, China will prioritize the needs of its economy over exports.
"In a world where shortages have become the biggest obstacle to economic growth, industries that use magnesium cannot afford another problem in the supply chain," says The Economist.
The lack of microelectronic chips, which are essential to the electronic systems of modern cars, has slowed or temporarily halted production, leading to a tight supply of cars and soaring prices.
The magazine had published a report that shed light on the economic crisis that the world is currently going through due to the Corona pandemic, the most important of which is the disruption of supply chains, and it ruled out that the global economy will return to normal in 2022.
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