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Growing concerns about a global magnesium shortage

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China is cutting back on magnesium production due to power shortages and carbon emission regulations. This has led to growing concern about a global shortage of the material.

The South China Morning Post (SCMP) reported on the 28th that the price of magnesium has risen from 14,000 yuan to 20,000 yuan per ton over the past ten years, from 8 to 9. On average, it traded at 42,000 yuan per month, and at one time reached 70,000 yuan.

China has a virtual monopoly on magnesium. Hence, a shortage in supply or price spike in China would hurt the automotive industry, which is its main customer.

Raising concerns about a shortage impact.

The German Federation of Non-Ferrous Metal Industries (WVM) raised these concerns with the government last week. “We anticipate that German and European stocks will be depleted by the end of November,”. China accounts for 87% of the world’s magnesium production.

The European Automobile Manufacturers Association (EAMA) expressed concerns in an open letter to the European Union (EU) Commission. It stressed that depletion of magnesium stocks in Europe could lead to “disasters” such as shop closures and job losses.

Aluminum alloys, which are essential for the production of automobiles, contain magnesium. After the shortage of the semiconductor supply, the automotive industry is facing a series of unfortunate news.

Accordingly, China has ordered magnesium mining and smelting companies in Yulin City, Shaanxi Province, the main producer, to reduce their electricity consumption.

The output of about 50 smelters in Yulin City, which accounts for about 60 percent of China’s magnesium production, has halved since mid-March, according to SCMP. In addition, 15 of them are expected to completely shut down by March of next year.

Mok Yeon-cheong, an analyst at S&P Global Platts, said, “European, Japanese and Chinese automakers have already cut production due to a shortage of semiconductors.”.

For MetaNews.

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Jonathan Hobbs

Jonathan Hobbs is an Australian investor and author that trades on a variety of asset classes, including currencies, equities, and commodities. Jonathan’s experience as a macro trader leverages his unique writing style to combine important elements, such as technical analysis and news. The other elements that he brings into his unique writing styles are foundation analysis aimed at rational equilibrium values, evaluating the sizes and motivations of buyers and sellers, as well as identifying the needs of the buyers and sellers in the individual markets. Jonathan is committed to quality writing for new traders as well as veterans.

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