Emergency of key raw materials of magnesium and silicon Alcoa warning: production may be reduced and limited delivery next year

Supply constraints caused by soaring energy prices have pushed US aluminium prices to near all-time highs, while growing shortages of key raw materials magnesium and silicon have further exacerbated the supply crunch.

Matalco Inc., the largest producer of aluminum billets in the United States, according to Bloomberg. Customers were warned on Wednesday that the company could cut production and limit deliveries as early as next year because of magnesium shortages.

In a letter to customers on October 13, Matalco said:

In the past few weeks, the supply of magnesium has dried up and we are unable to buy the magnesium we need to meet the full demand in 2022. The purpose of this letter is to provide a forewarning that if supply shortages continue or worsen, Matalco may need to cut production in 2022, thus affecting our customers.

(Alcoa Corp.), the largest primary aluminum producer in the United States, has also expressed concern about magnesium shortages, with some suppliers issuing so-called force majeure statements. There is a force majeure clause in the sales contract, which allows the supplier to suspend delivery due to circumstances beyond his control.

Not only magnesium, Matalco and Alcoa have pointed out that silicon is also in short supply, causing silicon prices to rise by 300% in less than two months.

Magnesium and silicon are essential alloy elements in the production of aluminum billets, and the shortage of these materials will aggravate the tight supply of aluminum, which may push up aluminum prices further.