A cross-industry group of European metals-producing and -using industries and their workers have issued a warning about the potentially catastrophic impact of the Chinese magnesium supply shortage.

The group, which includes Eurofer, ACEA, Eurometaux, industriAll Europe, ECCA, ESTAL, IMA, EUWA, EuroAlliages, CLEPA and Metals Packaging Europe, issued an urgent call for action against the imminent risk of Europe-wide production shutdowns as a consequence of a critical shortage in the supply of magnesium from China.

Magnesium is a key alloying material and widely used in the metals-producing industry. Without urgent action by the European Union, this issue, if not resolved, threatens thousands of businesses across Europe, their entire supply chains and the millions of jobs that rely on them, the group said.

Annual demand for magnesium is about 1.2 million tonnes, with 87% being produced by China and 39% being used by China. Europe and North America use each around 19%. Japan uses 4%. Europe is particularly hit by the current supply shortage since almost all magnesium used in Europe is imported from China.

Due to the Chinese Government’s effort to curb domestic power consumption, supply of magnesium originating from China has either been halted or reduced drastically since September 2021, resulting in a supply crisis of unprecedented magnitude.

With the European Union almost totally dependent on China (at 95%) for its magnesium supply needs, the European aluminum, iron and steel producing and using industries together with their raw materials suppliers are particularly impacted, with far-reaching ramifications on entire European Union value chains, including key end-use sectors such as automotive, construction and packaging.

The current Chinese supply shortfall has already resulted in record prices and worldwide distortions in the supply chain. Today’s remaining magnesium imports are trading at prices of about $10,000 to $14,000/tonne, up from approximately $2,000/tonne earlier this year, making it almost impossible for European companies to produce or source magnesium-containing materials at a viable level.

Europe is expected to run out of magnesium stocks by the end of November, with production shortages, business closures and associated job losses to follow, the group said.

The industries jointly called on the European Commission and national governments to work urgently towards immediate actions with their Chinese counterparties to mitigate the short-term, critical shortage issue as well as the longer-term supply effects on European industries.

The European Commission said it is holding talks with China to ease severe shortages of magnesium.