Car part suppliers and industry associations have warned that automakers could face significant material shortages if production in China, which accounts for 85% of global magnesium supply, does not pick up pace soon.
see photosComponents manufacturers supplying automakers with key components rely heavily on magnesium
European automakers, grappling with global chip shortages, have been quick to reassure shareholders in recent days that magnesium shortages are, for now, not a risk to their production plans. However, car part suppliers and industry associations have warned that automakers could face significant material shortages if production in China, which accounts for 85% of global magnesium supply, does not pick up pace soon. Car manufacturers usually don’t buy magnesium themselves in large quantities. But part manufacturers supplying automakers with key components rely heavily on magnesium, which can be used by itself or with aluminum to reduce the weight of cars.
Making the vehicles lighter is particularly useful for expanding the driving range of electric vehicles, which is important for Europe’s energy transition plans. Chip shortages have already extended delivery times for new cars, sometimes up to a year. Those queues could be lengthened without a rapid recovery in China’s magnesium exports, an auto industry source said.
China has allowed some magnesium producers to resume production, but not enough to ease shortages
Auto firms Stelantis and BMW say they don’t see any imminent problems with supplies. Others in the region say their inventory and magnesium already in transit will see them through to early 2022. But Volkswagen’s chief said in the earnings call that the reduction was expected. “We cannot predict right now that the magnesium deficiency, which will certainly go as planned, will be larger than the semiconductor shortage,” said Volkswagen’s Murat Aksel.
Industry sources said China’s magnesium production is around 50% of normal levels, as rising coal prices and energy rationing prompted smelters to cut or close operations. China has allowed some magnesium producers to resume production, but not enough to mitigate the shortage. Prices have retreated from record highs but they are still more than double the January levels. “We are very concerned that this is going to affect us in a couple of weeks,” Jonathan O’Riordan, head of Europe’s automobile manufacturers association ACEA, told Reuters.
Germany’s ZF, which uses magnesium for gearboxes and steering wheels, told Reuters that it was looking for new sources of magnesium from other countries, but would compensate for the loss of Chinese supplies given the size of its market share. was limited. “The calm before the storm,” said Teresa Schaad, a spokeswoman for Germany’s metal association WV Metal.
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