Aluminum is an industrial metal widely used in construction and car manufacturing, and the imbalance between supply and demand has pushed international aluminum prices near historic highs. And Matalco Inc., the largest manufacturer of aluminum billets in the United States. The company recently warned its customers that the company could cut production and limit deliveries as early as next year because of magnesium shortages. This means that aluminum prices are likely to rise further in the future.
Magnesium and silicon are indispensable alloy elements in the production process of aluminum billet, and the shortage of these materials will further aggravate the shortage of aluminum supply.
Matalco recently issued a notice to its customers and partners, warning of the potential impact of current magnesium supply shortages on aluminum billet production in 2022.
"magnesium supplies have dried up in the past few weeks and we are unable to buy the magnesium production needed for the whole year of 2022." Tom Horter, president of Matalco, said: "the purpose of the notification letter is to warn that if [magnesium] shortages persist or worsen, Matalco may reduce production in 2022, which will affect our customers."
Horter said it would purchase important raw materials such as magnesium as much as possible to maintain its planned production target for 2022. If supply continues to tighten, customers also need to prepare in advance.
In addition to billet manufacturer Matalco, the largest primary aluminum producer in the United States, Alcoa (Alcoa Corp.) Concerns about magnesium shortages have also been expressed, as some magnesium suppliers have been issuing so-called force majeure statements. Generally speaking, there is a force majeure clause in the sales contract, which allows the supplier to suspend delivery due to circumstances beyond his control.
In addition to magnesium, Matalco and Alcoa have also pointed out that the supply of silicon is also insufficient. Silicon prices have risen 300 per cent in less than two months.
In addition to the supply crisis of magnesium and silicon, there is also a risk of shortages of other materials needed for billet production, Matalco added. Silicon, natural gas and other additive materials have all signalled a serious shortage due to challenges in energy, transportation, labor and other areas.
Global commodity shortages are growing, and countries are beginning to restrict exports of key raw materials. Indonesian President Joko Widodo (Joko Widodo) wants Indonesia to stop exporting bauxite and crude palm oil to stimulate domestic investment in processing and manufacturing, according to media reports.
Indonesia has banned the export of nickel ore since January 2020. Mr Zokowi said he would not back down on halting the export of raw materials.
"for our goods, we want to set up factories and make them locally. This is our right. Let's face it, don't be held back by the prosecution. This is an opportunity for us to integrate domestic industries. " Zokovi said.
