Security of Supply for Aluminum Alloy Producers

Aluminum Alloys represent the clear "lightweight material of choice" in transportation & consumer products. Aluminum Alloy production represents the single largest market sector for magnesium.  

The 5000 alloy series is one of the most important aluminum alloy groups with a large variety of applications in transportation, construction, shipbuilding, consumer goods & aerospace.  Magnesium is the most critical alloying element for 5000 series alloys and cannot be replaced.  Magnesium levels range from 0.5% to 13% with 4 - 5% being typical.  5000 series alloys are produced as rolled sheet & plate products, pipes, rods, wires, forged parts & some simple extruded profiles.

Magnesium is also critically important in the 6000 series alloys which typically contain between 0.5 to 1.2% Mg. 6000 series alloys are used to produce a wide array of lightweight extruded profiles for industrial, automotive & construction applications.

As demand for weight reduction continues to increase, growth prospects for aluminum alloys containing magnesium are expected to remain strong. However, as noted below, magnesium market constraints continue to be challenging.  

Magnesium Supply & Price Constraints in the USA: Because magnesium is a critical alloying element, aluminum alloy producers have had little choice but to accept unfavorable magnesium market dynamics.  Beginning in 2005, the leading American magnesium metal producer succeeded in securing punitive tariffs on imported magnesium from China and the result has been almost 20 continuous years of exceptionally high magnesium prices in the USA.  High magnesium pricing compared to magnesium's Free Market regions has hurt the competitiveness of  American companies that rely on magnesium for their business.  According to USGS reported pricing in the 17 years between 2004 and 2021, the annual US Spot Price for western magnesium was an of average $2,260 higher than the corresponding Free Market magnesium price. 

Since COVID, the magnesium supply situation has worsened in the American market. Magnesium supply has become uncertain resulting in significant price and supply volatility. American markets have suffered from the 2 year ongoing force majeure filed by the leading American Magnesium metal producer.  Limited magnesium supply has forced some aluminum alloy producers to invoke their own force majeure because of an inability to supply aluminum alloy products containing  magnesium. At least one aluminum alloy supplier has filed a law suit claiming significant damages. In spite of magnesium supply uncertainty, the US government recently renewed the punitive tariffs on Chinese magnesium imports. 

According to the USGS, the average price penalty paid for one ton of magnesium in the US compared to free market prices has sky rocketed to over $11,000 in 2022 and $7,800 in 2023.  While contractual prices are most certainly lower, there is no doubt that magnesium supply uncertainties have left many customers scrambling for material which has had a chilling affect on the industry.

Magnesium Supply & Price Constraints in Free Markets: Since COVID, the magnesium supply situation has also worsened in Mg Free Markets although not as severely as in the US.  In an attempt to reduce energy consumption and emissions, the Chinese government imposed magnesium production curtailments in late 2021. While supply restrictions have now eased somewhat, the average Free Market price of magnesium in 2023 was still over $1,000 per ton higher than the 2020 average. The fact that Free Market supply and pricing seems to be dictated at the whim of the Chinese government and may return at anytime, magnesium supply & pricing uncertainty remains a major source of concern. Like the uncertainties in the US market, magnesium supply & pricing volatility has unnerved many Free Market magnesium customers. 

Tech Magnesium technology provides magnesium solutions for the aluminum industry that ensure competitive pricing, security of supply and the lowest carbon footprint

Magnesium needs to get on a Pathway towards Net - Zero

Today, magnesium has an exceptionally high carbon footprint which continues to undermine Aluminum alloy producers own carbon footprint.  This will become an increasingly important issue as the world focuses more intently on achieving net-zero emission targets.   

In addition to maintaining cost & productivity competitiveness, magnesium metal producers also need to utilize process technology that will reduce magnesium's carbon footprint to levels that are compatible with the world's net - zero targets. 

Today, this is not the case, for example, the cleanest aluminum plants with a carbon footprint of ~3.9 - 5.2 kg CO2 per kg Al are more than 4 - 5 times lower than the average for plants producing over 80% of world's magnesium in China. Furthermore, the remaining magnesium produced outside of China has a carbon footprint of at least ~3 times higher than the cleanest aluminum plants. 

With investment moving away from assets that are not compatible with the transition to a net-zero world, magnesium metal producers clearly need to get onboard with clean technology. Magnesium users such as Aluminum alloy producers and automotive companies will increasingly struggle to justify ongoing use of magnesium from the current highly polluting supply sources especially in the face of stiffer regulations for non-compliance.

Importantly, Tech Magnesium's ULTRA CLEAN Process not only offers security of supply but it has the magnesium industries lowest  carbon foot print that is on a par with today's cleanest aluminum plants - click on the ULTRA CLEAN Process tab above for details.

Tech Magnesium's Breakthrough Process Technology will provide competitive relief  with targeted solutions for aluminum industry

The hallmarks of Tech Magnesium's breakthrough ULTRA Clean Aluminothermic & Clean Silicothermic Processes include.

• cost leadership with a cost per ton that is less than Chinese magnesium, 
• flexible, modular production technology that can be scaled to meet market demand, 
• security of supply from western based supply source, and,
• a low carbon footprint on par with the cleanest aluminum plants and compatible with a net-zero pathway