Commodities

EU in talks with China on magnesium shortages

Credit: REUTERS/ALY SONG

The European Commission is holding talks with China to ease severe shortages of magnesium, it said on Friday, after industry groups warned of potential plant shutdowns that could hit millions of jobs.

By Eric Onstad

LONDON, Oct 22 (Reuters) - The European Commission is holding talks with China to ease severe shortages of magnesium, it said on Friday, after industry groups warned of potential plant shutdowns that could hit millions of jobs.

"The Commission is aware of the current shortage of magnesium which is affecting global supply chains and is monitoring the situation closely," a Commission spokesperson told Reuters by email.

"We are raising this issue with our Chinese counterparts in order to address immediate shortages and are assessing long-term solutions to tackle this strategic dependency."

China supplies about 95% of the bloc's demand for magnesium, a key ingredient in aluminium and steel, but shipments have dried up since September, a statement from industry groups said.

"This issue, if not resolved, threatens thousands of businesses across Europe, their entire supply chains and the millions of jobs that rely on them," said the joint statement by a dozen industry groups, including metal producers, auto suppliers and the packaging sector.

Europe is expected to run out of magnesium stocks by the end of November, they added.

The Chinese government's efforts to curb power consumption have hit output of a range of metals, including magnesium, also widely used in the aerospace industry.

Prices of magnesium in China MGN-CHINA have soared, more than doubling over the past year to $4,700 per tonne, the highest since 2008.

In Europe, remaining stocks are going for $10,000-$14,000 a tonne, the industry groups said.

"The magnesium supply shortage should be discussed in the same international fora as the semiconductors shortage," Eurometaux, the European Association of Metals, told Reuters in a separate email.

In the longer term, Europe should examine whether it can restart domestic magnesium production after the sector closed in the early 2000s due to low Chinese prices, Eurometaux added.

(Reporting by Eric Onstad; Editing by Kirsten Donovan and Louise Heavens)

((eric.onstad@thomsonreuters.com; +44 20 7542 7093; Twitter https://twitter.com/reutersEricO; Reuters Messaging: eric.onstad.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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