Magnesium is missing, therefore little aluminum and at high prices. Car in trouble?
The scarcity of raw materials necessary for the production of aluminum risks putting the automotive sector to the test, imposing production blocks or price increases.
Matalco, the largest US producer of aluminum bars, warns customers that it could reduce production and ration shipments due to a lack of magnesium for alloys. This big supply problem is then joined by a further brake linked to the boom in natural gas prices on the US market, albeit on a smaller scale than in Europe.
Alcoa, the largest US producer of crude aluminum, has also expressed concern over magnesium shortages, with several suppliers forced to invoke so-called force majeure clauses. These are incorporated into sales contracts to allow suppliers to suspend deliveries due to circumstances beyond their control.
"In recent weeks, magnesium availability has shrunk and we have not been able to purchase our required Mg units throughout 2022," Matalco said in Wednesday's letter.
“The purpose of this note is to provide this advance warning that if the scarcity continues (and especially if it worsens), Matalco may have to reduce production in 2022, resulting in fewer deliveries to customers.
Both Matalco and Alcoa have noted that silicon is also in short supply. This shortage, triggered by production cuts in China, has caused prices to rise by 300% in less than two months. Aluminum bars cannot be produced without magnesium and silicon, which are essential hardeners for alloys.
Just this year Alcoa said it would pay a dividend to its shareholders at the very end of October. The company also announced a $ 500 million share buyback program. Alcoa's stock nearly quadrupled from a year ago, helped by a historic surge in aluminum prices. The push in the price of aluminum, also on the European market, has helped the profits of these companies:
But without raw materials and with skyrocketing energy prices, production slows down and eventually stops, and profits run out. Above all, the production of the industries that exploit this raw material, advanced automotive in the lead, stops downstream.
Thanks to our Telegram channel you can stay updated on the publication of new articles of Economic Scenarios.
The article Magnesium is missing, therefore little aluminum and at high prices. Car in trouble? comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/manca-il-magnesio-quindi-poco-alluminio-e-a-prezzi-elevati-auto-in-difficolta/ on Mon, 18 Oct 2021 08:00:45 +0000.