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Magnesium maelstrom throws up another roadblock for automakers

09/20/2021 | 01:48pm EDT

BANGALORE, Sept 20 - Widespread closures of magnesium smelters in top producer China due to a clampdown on emissions and shortages of energy have propelled prices of the metal to their highest since 2008, posing another headache for automakers.

Magnesium, also widely used in the aerospace industry, is needed to make aluminum alloys for the auto sector, which is already reeling from chip shortages.

Prices of the metal <MGN-CHINA> in Europe have rallied to their highest in 13 years and could rise further over the next few months, before returning "to more normal levels by the end of the first half of 2022," the International Magnesium Association (IMA) said on Monday.

"The reduction of capacity and increases in pricing are almost unprecedented, and our industry has not experienced such rapid market changes since the 2008 Beijing Olympics," IMA President Rick McQueary said in a statement.

The IMA urged "magnesium users to continue to take a long-term view despite the current situation."

There is no significant output of magnesium outside of China, with most production from the Shaanxi region.

Magnesium is also used for zinc alloys and the supply crunch could also reverberate across sectors including those making missile parts, laptops and mobile phones. (Reporting by Tom Daly in Beijing, Melanie Burton in Melbourne, Mai Nguyen in Hanoi, Bharat Govind Gautam and Arpan Varghese in Bengaluru; Editing by Pratima Desai and Alexander Smith)

© Reuters 2021
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