Polish companies on the verge of bankruptcy? Another car crisis!

The auto industry, which has suffered from a crisis in the supply of semiconductors and a shortage of special steel for several months, faced a new threat posed by a shortage of magnesium. This metal is an essential component of aluminum alloys, and is one of the primary materials used in the production of engines, transmissions, steering systems, and many other components.

The crisis erupted suddenly Reducing magnesium production in China, which has so far provided nearly 90 per cent. Global supply of this mineral. Most of the steel mills are located in the city YulinThe authorities decided to close 35 of the 50 of these plants by the end of the year, and ordered the rest to cut production in half. China is experiencing an energy crisis, and magnesium smelting is very energy-intensive. To make matters worse, this metal is very difficult to store because it oxidizes quickly. Thus, if China had not increased production quickly, this raw material would have fallen to a very low level.

“Magnesium cannot be replaced, so the auto industry could find itself in a catastrophic situation. Light alloys are used in many Polish factories. Thus, a shortage of this raw material could lead to downtime, which could lead to a whole avalanche of consequences, such as problems for collaborators. – explains Thomas Poppin, Managing Director of SDCM. “Most of them are small companies that do not have the financial reserves to survive the production halt,” he adds.

The problems with the supply of magnesium were reflected in the prices of this raw material. Magnesium imported to Europe More expensive In the past weeks at 75 percent, reaching a record level of more than 9 thousand. dollars per ton. at some point WV . Metals, the German Non-ferrous Metals Trade Association estimated that Magnesium reserves in Germany and all over Europe will run out in a few weeks. There were also concerns that due to reduced magnesium production, China would limit its exports to significantly lower levels, primarily meeting the needs of its industry.

European aluminumThe Organization of European Producers has asked the European Union and national governments to start urgent talks with the Chinese side. The note stated that the current situation was a result of the risks taken by making the European economy dependent on the import of key components and raw materials from China.

Unlike the European Union, which is completely dependent on Chinese suppliers for magnesium, The United States kept its own productionAlthough it is still not enough to fully meet the needs of American industry. “Undoubtedly, the economic policy of the European Union requires the adoption of new solutions. Successive crises in supplies – first steel, then semiconductors, and now magnesium clearly show that European industry requires strategic production in the countries of the European Union” – says Thomas Poppin.

At the moment, it seems unlikely that the European Union and China will reach an agreement on magnesium production, but there are signs that China’s production is increasing again. For example, production in Shaanxi Province has grown to 70 percent. level of the first half of the year. Prices have also stabilized in Europe, although they are still high. In turn, in the October survey clipa Most automakers and parts manufacturers said they are primarily concerned about the first quarter of 2022. So it looks like they’ve got enough magnesium by the end of this year.

Therefore, there are positive signs, but it is not yet certain whether the above problems will not appear at the beginning of 2022. At the same time, in the long term, it is recommended to think more deeply about the consequences of the European market’s dependence on the supply of this strategic raw material from one country just far away.