Los Angeles, CA, Nov. 03, 2021 (GLOBE NEWSWIRE) -- The global magnesium market is expected to be in short supply over the next six months, according to a new report released by market research firm IndexBox. China, the primary supplier of magnesium, is cutting production to reduce greenhouse emissions as part of a comprehensive program to hold energy consumption. With 900K tonnes, China accounts for 87% of world magnesium output. The country also comprises 81% of the global exports of 385K tonnes, so a marked reduction in supply from China would be a shock to the world market.
In the Shaanxi Province, a critical magnesium-producing region in China, 35 of the 50 magnesium plants have been shut down to date. The rest of the factories were forced to cut production in half to save energy. In September 2021, the Yulin Municipal Development and Reform Commission (Shaanxi Province) introduced restrictions that require businesses to suspend or reduce production intensity by 50-60%, depending on the level of energy consumption of the company and the amount of its carbon dioxide emissions.
The world market reacted to the introduction of restrictive measures in China with a jump in prices. In early September, European average magnesium prices surpassed $4,500 per tonne, which is a decade's record, while in June, they stood at $2,800 per tonne, IndexBox says.
The European market is almost entirely dependent on Chinese supplies since there is no domestic production within the EU. If the shortage persists, there is a risk that the current stocks of magnesium in Europe, and Germany in particular, a key importer of this metal, could exhaust by the end of 2021. The automotive industry, consuming near 35% of magnesium produced worldwide, could suffer most from the metal shortage.
A cross-industry group of associations issued an urgent call for action against the imminent risk of European production shutdowns due to a possible suspension of supply chains. This letter has been signed by European Aluminium, Eurometaux, Eurofer, ECCA, IMA, ESTAL, Metals Packaging Europe, CLEPA, EuroAlliages, EUWA, and the European Automobile Manufacturers’ Association (ACEA), representing the 15 major Europe-based automobile manufacturers including BMW, Toyota, Volkswagen, Honda, Hyundai and Ferrari. Earlier, the German Non-Ferrous Metals Association (WVM) has sent a similar letter to the German government calling for negotiations with China to increase magnesium supplies to the EU.
World’s Largest Magnesium Importers
The volume of global magnesium imports amounted to 345K tonnes in 2020, equating to $891M. The purchases of the twelve major importers of magnesium, namely Canada, Germany, the U.S., Japan, South Korea, India, Taiwan (Chinese), Norway, France, Austria, Romania and Russia, represented more than two-thirds of total imports. In value terms, the largest magnesium importing markets worldwide were the U.S. ($156M), Canada ($92M) and Germany ($89M), with a combined 38% share of global imports.
About IndexBox
IndexBox is a market research firm developing an AI-driven market intelligence platform that helps business analysts find actionable insights and make data-driven decisions. The platform provides data on consumption, production, trade, and prices for more than 10K+ different products across 200 countries.
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Sources
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