The latest magnesium shortage caused by reduced supply of the product from China is set to impact both steel production and end-use sectors. Due to the Chinese government’s efforts to curb domestic power consumption, supply of magnesium originating there has either been halted or reduced drastically since September.

European industry representatives warned last week that the EU must take immediate action to secure magnesium supply, with stocks on course to run out by the end of November, threatening production stoppages across various industries.

The EU sources 95% of its magnesium requirement from China, meaning the European aluminium, iron and steel producing and using industries, together with their raw materials suppliers are particularly impacted. This will have a knock-on effect on end-use sectors such as automotive, construction and packaging, says a cross-industry group including steelmakers’ association Eurofer.

The current Chinese supply shortfall has already resulted in record prices and worldwide distortions in the supply chain. Today’s remaining EU magnesium imports are trading at “extortionate prices” of about $10,000-14,000/tonne, up from some $2,000/t earlier this year. This “makes it almost impossible for European companies to produce or source magnesium-containing materials at a viable level,” the group says in a note.