Lack of magnesium from China threatens an industrial halt in Europe

Magnesium is another raw material that is beginning to become scarce due to production limitations in Chinese foundries. The component is key for steel or aluminum alloys used in cans or car bodies. The medium and heavy industry warns that there are only reserves until November and that they will be forced to stop factories throughout Europe. Merkel at the last EU summit asked the rest of the leaders to take action.

Magnesium may be the last straw for your supply crisis become a major industrial blackout in Europe. More than a dozen business associations, ranging from car manufacturers to canned packaging, issued an urgent call to action this weekend against the looming risk of production shutdowns across Europe as a result of a critical shortage in magnesium supply. from China.

Magnesium is a key alloying material and is widely used in the metal production industry. The shortages threaten thousands of companies across Europe, all of their supply chains and the millions of jobs that depend on them, the group said.

The world demand for magnesium is 1.2 million tons per year. China consumes 39% of the total, while producing 87% of the world’s supply. Consumption in Europe and North America amounts to 19% in each region, while the proportionate share of demand in Japan is 4%. Europe is particularly affected by the current supply shortage, as almost all the magnesium used in Europe is imported from China. Specifically, 95% of the magnesium used comes from the Asian giant.

Beyond the car

The production of magnesium in China has been drastically reduced or has stopped, industrial employers denounce, due to Beijing’s objective of reducing polluting emissions, which has caused a lack of supply at a global level and an unprecedented rise in prices. The current Chinese supply shortage has already led to record prices and global distortions in the supply chain. The marketing price is between $ 10,000 and $ 14,000 per ton, compared to $ 2,000 at the beginning of the year, “which makes it almost impossible for European companies to produce or obtain materials containing magnesium at a viable level,” they denounce. the industry.

The outgoing Chancellor of Germany, Angela Merkel, transferred the problem to the rest of European leaders, according to the Financial Times. Europe is expected to run out of magnesium stocks at the end of November, with production shortages, business closures and associated job losses. Brussels is working on a strategy to rely less on imports of raw materials, including magnesium, after fears rose that China would cut off supplies. The Commission has stated that it is in talks with Beijing to alleviate the magnesium shortage.

The lack of magnesium is a problem for industries that use steel or aluminum alloys, such as the automobile or heavy industry, but also the food sector. This component is used in beverage cans and food containers such as tuna or tomato. “It is a time of industrial uncertainty. In an inflationary environment, in certain cases of shortages derived from adjustments between supply-demand and logistical complications,” according to the general secretary of the fish and seafood canneries (Anfaco), Juan Vieites.

“The cost of a metal drum has risen 40% and that of electricity 450% in the last year,” says the vice president of the Spanish Association of Vegetable Canned Manufacturers (Agrucon) and general director of Conesa Group, Manuel Vázquez .

On the other hand, Vázquez points out that the rise in raw materials is fostering speculation and the “psychosis” that leads companies to plan an “excess storage” of raw materials for fear that there is no supply, which underpins this rise.

Spain is the leading producer in the European Union (EU) of canned fish (canned and in other packaging) and the second worldwide in the case of tuna, with 359,091 tons and 1,755 million euros, according to Anfaco.

Consumption of these preserves stood at 224,388 tons (10.3%) and they spent 2,320 million euros (+ 11.3%), according to figures from the Ministry of Agriculture, Fisheries and Food.