By Tyler Durden
While a shortage of semiconductors has plagued the global auto automotive industry this year, the market is now turning its focus to magnesium, a hardening agent of aluminum. Such a shortage could paralyze the aluminum billet production used to make engine blocks, gearboxes, frames, body panels, and rims, among other critical items for automobiles in Europe and the Americas.
“A magnesium shortage could trigger a shortage of aluminum, which in turn could also hit car production.
“We stress at this point that such a scenario is not yet included in our estimates. The issue has just emerged and no carmaker has yet warned about it,” BofA Securities analyst told clients in a note.
The source of the shortage is China’s monopoly on global magnesium production. Production curbs of energy-intensive smelters have reduced the industrial metal’s output, resulting in dwindling stockpiles in Europe and North America.
