Business Maverick

International Finance

Aluminum Makers Sound the Alarm About U.S. Magnesium Shortage

Aluminum coils sit in a cooling area at the Arconic Inc. manufacturing facility in Alcoa, Tennessee, U.S., on Tuesday, Jan. 24, 2017. Arconic Inc. is scheduled to release earnings figures on January 31. Photographer: Luke Sharrett/Bloomberg
By Bloomberg
15 Oct 2021 0

There’s a widening scarcity of essential raw materials for aluminum used to make automobiles and building supplies that threatens to worsen a supply squeeze that already has pushed U.S. prices close to all-time highs. 

Matalco Inc., the largest U.S. producer of aluminum billet, is warning customers it may curtail output and ration deliveries as soon as next year amid a magnesium shortage.Difficult-to-source supplies of other raw materials and soaring natural gas prices are adding to the challenges, Matalco said in a letter to customers obtained by Bloomberg News.

Alcoa Corp., the largest U.S. maker of raw aluminum, also voiced concerns about magnesium scarcity and has been seeing so-called force majeure declarations by some suppliers. Force-majeure clauses are embedded in sales contracts to allow suppliers to suspend deliveries owing to circumstances outside of their control.

“In the last several weeks, magnesium availability has dried up and we have not been able to purchase our required Mg units for all of 2022,” Matalco said in the Oct. 13 letter. “The purpose of this note is to provide this advanced warning that, if the scarcity continues (and especially if it becomes worse), Matalco may need to curtail production in 2022, resulting in allocations to our customers.”

Matalco and Alcoa both noted that silicon also is in short supply. That shortage, sparked by production cuts in China, sent prices up 300% in less than two months. Aluminum billets can’t be produced without magnesium and silicon, which are essential hardeners for alloys.

Gallery

Comments - share your knowledge and experience

Please note you must be a Maverick Insider to comment. Sign up here or sign in if you are already an Insider.

Everybody has an opinion but not everyone has the knowledge and the experience to contribute meaningfully to a discussion. That’s what we want from our members. Help us learn with your expertise and insights on articles that we publish. We encourage different, respectful viewpoints to further our understanding of the world. View our comments policy here.

No Comments, yet