EU industrialists declare risk of shutdown due to magnesium deficiency

Twelve European business associations representing auto, metals, packaging and other industries warned of an “imminent risk of a production shutdown in Europe” at the end of November due to depletion of magnesium reserves. This is stated in a joint statement of the associations.

“Europe is expected to run out of magnesium by the end of November, resulting in production shutdowns, plant closures and further job losses. If the European Union does not take urgent action on this issue, and if it is not resolved, then it threatens thousands of businesses across Europe, their entire supply chains and the millions of jobs that depend on them, ”the statement said.

Magnesium deficiency has arisen due to the shutdown of manufacturing plants in China in order to save electricity. China supplies 87% of the world’s magnesium and about 95% to Europe, and 35 of the 50 smelters are currently closed, the associations said. Magnesium prices in Europe have increased many times over and at the moment the metal is being sold “at extortionate prices,” the statement said. Today magnesium is sold at a price of $ 10,000 to $ 14,000 per ton, before the deficit, its price did not exceed $ 2,000.

“To this end, our industries are jointly calling on the EU Commission and national governments to urgently take immediate action with their Chinese counterparts to mitigate short-term, critical shortages as well as long-term supply prospects for European industries,” the statement said.

The European Commission told the Financial Times that the authorities are aware of the situation. “We are raising this issue with our Chinese colleagues in order to solve the deficit problem, and we are evaluating long-term solutions to eliminate this strategic dependence,” the European Commission said.

Magnesium deficiency is not the only problem for automakers. There is also a shortage of electronic components and microchips on the market. With the onset of problems of automakers with electronic components, there was a shortage of cars on the market and the waiting times for the car ordered by the buyer significantly increased. In September, car dealers interviewed by Vedomosti said that the average waiting time for a mass segment car (B- and C-class) had grown by 1.5 months from the beginning of the year due to a shortage of chips. Previously, various predictions were given as to when the auto industry will be able to establish stable chip shipments: from the end of 2021 to the middle or even the second half of 2022.But now there is more and more evidence that the resolution of the problem with microchips could migrate from 2022 to 2023, he said. To Vedomosti, VTB Capital analyst Vladimir Bespalov.

The market for new passenger cars and LCV in Russia fell by 22.6% in September compared to the same month in 2020, the Association of European Businesses (AEB) calculated. “The well-known shortage of cars in the market, linked to production cuts and global semiconductor shortages, as well as emerging concerns such as the energy crisis in China and the UK, rising raw material costs and other concerns, will keep the negative trend going over the next few months.” – quoted the AEB the head of the committee of automakers of the association Thomas Stärzel.



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