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Approaching Magnesium Deficiency Threatens to Disrupt the European Auto Industry

magnesium

Approaching Magnesium Deficiency Threatens to Disrupt the European Auto Industry

IndexBox has just published a new report: ‘World – Magnesium – Market Analysis, Forecast, Size, Trends and Insights‘. Here is a summary of the report’s key findings.

Limiting industrial carbon dioxide emissions in China has halted work in two-thirds of Shaanxi’s fifty magnesium plants, while the rest of the factories will be required to halve production. As a result, in the next six months, the global market may face a deficit, hitting the European automotive industry particularly hard. The German Non-Ferrous Metals Association (WVM) calls on the German government to begin negotiations with China to increase magnesium supplies to Europe.

Key Trends and Insights

Over the next six months, a deficit is expected in the world magnesium market. China, the primary supplier of magnesium, is cutting production in order to reduce greenhouse emissions as part of a comprehensive program to reduce energy consumption. According to IndexBox estimates, China accounts for 87% of world production and 81% of the total exports, so a marked reduction in supply in the country will be a shock to the global market.

In the Shaanxi Province, a critical magnesium-producing region in China, 35 of the 50 magnesium plants have been shut down to date. The rest of the factories were forced to cut production in half to save energy. In September of this year, the Yulin Municipal Development and Reform Commission (Shaanxi Province) introduced restrictions that require businesses to suspend or reduce production intensity by 50-60%, depending on the level of energy consumption of the company and the amount of its carbon dioxide emissions.

The world market reacted to the introduction of restrictive measures in China with a jump in prices. European average magnesium prices surpassed the $4,500 per tonne mark in early September, a peak since 2008, while back in June, they were at $2,800 per tonne (according to IndexBox estimates).

The automotive industry, consuming 35% of magnesium produced worldwide, could suffer from the metal shortage. The European market is almost entirely dependent on Chinese supplies, which cover 95% of the total demand for the metal since there is no domestic production within the EU. It is expected that the current reserves of magnesium in Europe, and Germany in particular, a key importer of this metal, will be exhausted by November 2021.

A cross-industry group of associations issued an urgent call for action against the imminent risk of European production shutdowns due to a possible suspension of supply chains. This letter has been signed by European Aluminium, Eurometaux, Eurofer, ECCA, IMA, ESTAL, Metals Packaging EuropeCLEPA, EuroAlliages, EUWA, and the European Automobile Manufacturers’ Association (ACEA), representing the 15 major Europe-based automobile manufacturers including BMW, Toyota, Volkswagen, Honda, Hyundai and Ferrari. Earlier, the German Non-Ferrous Metals Association (WVM) has sent a similar letter to the German government calling for negotiations with China to increase magnesium supplies to the EU.

Global Magnesium Production

Global magnesium production dropped to 1M tonnes in 2020, with a decrease of -7.5% on the previous year. In value terms, magnesium production declined from $3B in 2019 to $2.8B in 2020 estimated in export prices.

China (900K tonnes) constituted the country with the largest volume of magnesium production, comprising approx. 87% of total volume. Moreover, magnesium production in China exceeded the figures recorded by the second-largest producer, Russia (60K tonnes), more than tenfold. The third position in this ranking was occupied by Brazil (20K tonnes), with a 1.9% share.

Global Magnesium Exports

Global magnesium exports fell to 385K tonnes in 2020, waning by -9.8% against the previous year. In value terms, magnesium exports shrank from $1.2B in 2019 to $1.1B in 2020.

China prevails in magnesium export structure, recording 311K tonnes, which was approx. 81% of total exports in 2020. The U.S. (11K tonnes), Turkey (9.4K tonnes), Germany (9.3K tonnes), the Czech Republic (6.7K tonnes), Russia (6.7K tonnes) and Taiwan (Chinese) (5.8K tonnes) took a little share of total exports.

In value terms, China ($759M) remains the largest magnesium supplier worldwide, comprising 72% of global exports. The second position in the ranking was occupied by Turkey ($39M), with a 3.7% share of global exports. It was followed by the U.S., with a 3.4% share.

In 2020, the value of supplies from China and the U.S. dropped by -15.6% y-o-y and -15.3% y-o-y, respectively. By contrast, Turkey increased exports in value terms twofold.

In 2020, the average magnesium export price amounted to $2,747 per tonne, waning by -3.8% against the previous year. Prices varied noticeably by the country of origin; the country with the highest price was Turkey ($4,110 per tonne), while China ($2,442 per tonne) was amongst the lowest. In 2020, the most notable rate of growth in terms of prices was attained by Russia, while the other global leaders experienced more modest paces of growth.

World’s Largest Magnesium Importers

The purchases of the twelve major importers of magnesium, namely Canada, Germany, the U.S., Japan, South Korea, India, Taiwan (Chinese), Norway, France, Austria, Romania and Russia, represented more than two-thirds of total import. Mexico (8.6K tonnes) held a minor share of total imports.

In value terms, the largest magnesium importing markets worldwide were the U.S. ($156M), Canada ($92M) and Germany ($89M), with a combined 38% share of global imports.

Source: IndexBox Platform

isocyanate

Chinese Isocyanate Exports Skyrocket Due to Booming Demand from Brazil, Russia and Peru

IndexBox has just published a new report: ‘China – Isocyanates – Market Analysis, Forecast, Size, Trends And Insights’. Here is a summary of the report’s key findings.

China strengthens its leadership in global isocyanate exports. In 2020, Chinese supplies abroad grew by +20.4% y-o-y to $716M with rising purchases from Brazil, Russia, Peru, Viet Nam and India. In physical terms, Chinese exports rose by +38% y-o-y to 376K tonnes. Brazil, Viet Nam and Taiwan constitute the largest importers of isocyanates from China. Among the leading importing countries, Brazil featured the highest spike in purchases of Chinese isocyanates, boosting the imports by $45M. The average export price for isocyanates from China decreased by -13% y-o-y to $1,905 per tonne in 2020. 

Chinese Isocyanate Exports by Country

China leads in global isocyanate exports. In 2020, Chinese supplies constituted 19.6% of the total isocyanate volume exported worldwide.

In 2020, exports of isocyanates from China skyrocketed to 376K tonnes, increasing by +38% against the year before. In value terms, isocyanates exports surged by +20.4% y-o-y to $716M (IndexBox estimates) in 2020.

Brazil (46K tonnes), Viet Nam (44K tonnes) and Taiwan (Chinese) (28K tonnes) were the main destinations of isocyanates exports from China, with a combined 31% share of total exports. India, Indonesia, Pakistan, the U.S., Russia, Australia, the Philippines, South Korea, Peru and Singapore lagged somewhat behind, comprising a further 33%.

In value terms, the largest markets for isocyanates exported from China were Brazil ($76M), Viet Nam ($70M) and India ($57M), together comprising 28% of total exports. Taiwan (Chinese), the U.S., South Korea, Pakistan, Russia, Indonesia, the Philippines, Peru, Singapore and Australia lagged somewhat behind, accounting for a further 35%.

In 2020, the increased supplies to Brazil, Russia, Peru, Viet Nam and India provided most of the increment in Chinese exports. Brazilian isocyanate purchases spiked by $45M against the previous year. Russia ramped up its imports by $20M. The supplies to Peru, Viet Nam and India grew by $13M tonnes, $9M and $8M, respectively.

In 2020, the average export price for isocyanates from China amounted to $1,905 per tonne, declining by -13.1% against the previous year. There were significant differences in the average prices for the major export markets. In 2020, the country with the highest price was South Korea ($3,402 per tonne), while the average price for exports to Australia ($1,295 per tonne) was amongst the lowest. In 2020, the most notable growth rate in terms of prices was recorded for supplies to India, while the prices for the other major destinations experienced more modest paces of growth.

Source: IndexBox Platform

timber

WOODEN SKYSCRAPERS PUSH TRADE IN CROSS-LAMINATED TIMBER TO NEW HEIGHTS

Closer to Nature

American biologist Edward Wilson is known for popularizing the term “biophilia” to explain the inherent pleasure people derive from being in nature. By extension, “biophilic design” incorporates natural materials, natural light, vegetation, nature views and other experiences of the natural world into the modern built environment. A relatively new building material, cross-laminated timber (CLT), is quickly becoming the darling of the biophilic design movement.

CLT is made from layers of dried lumber boards stacked in alternating direction at 90-degree angles, which are then glued and pressed to form solid panels. The resulting panels have exceptional strength, stability and fire resistance. According to a recent USDA study, a seven-inch floor made of CLT is fire-resistant for two hours. CLT structures have proven more resilient to earthquakes than many other types of building materials, fostering great interest among builders in Japan where biophilic design has been part of the culture for centuries. CLT featured prominently in the rebuild of Christchurch, New Zealand, which was severely damaged by earthquakes in 2010 and 2011.

Global Cross-Laminated Timber “Plyscrapers” Reach New Heights

The cross-laminated timber wood panel system was developed in Europe in the 1990s as an alternative to stone and masonry concrete — and to boost employment in the forests products industry. Europe still leads supply and demand in the CLT market, but use of CLT is rapidly gaining popularity in the United States, Canada and across the world.

CLT is the basis of the “tall wood” movement, as the material’s high strength, dimensional stability and rigidity allow it to be used in mid- and high-rise construction of apartment and office buildings and even power line towers. Growing investment in large-scale wood construction is evident with the completion of several prominent structures over the last several years.

They include luxury apartment buildings in Melbourne, Australia and Bergen, Norway as well as the Brock Commons on the campus of the University of British Columbia. Last year, construction began on a 24-story hotel and office tower composed of 76 percent wood in Vienna, Austria. In 2018, Sumitomo Forestry announced its plan to build the world’s tallest wooden skyscraper – at 70 stories tall, the building will be made 90 percent of wood, capable of sequestering 100,000 tons of CO2. Japan also used CLT extensively in its 2020 Olympic National Stadium to achieve a natural aesthetic.

Global Plyscrapers

Building Global Customers

The global CLT market was valued at $773 million in 2019 and was expected to grow to $1.6 billion by 2025. Production of CLT worldwide is estimated based on surveys and reported by the publication Timber-Online at 1.44 million cubic meters in 2019, although data is not available for all production sites. An estimated 65 percent is produced in Italy, Czech Republic, Germany, Austria and Switzerland. With additional production coming online, global annual output is expected to grow to between 2 and 2.5 million cubic meters this year.

How much of this production is traded internationally? It’s not entirely clear. There is no international agreement yet on how to classify CLT on the Harmonized Tariff Schedule. The product currently falls within a broader category with glulam (another laminated timber product), obscuring our understanding of specific trade flows. (With support from USDA’s McIntire-Stennis program, The Center for International Trade in Forest Products at the University of Washington is building a database to better understand international trade in wood products while governments sort this out.)

Japan’s Ministry of Finance recorded 918,000 cubic meters of laminated lumber (glulam and CLT) were imported in 2018, mainly from Europe. U.S. imports of CLT in 2018 were much smaller – less than 20,000 cubic meters, also primarily from Europe. Whether this number will grow remains to be seen – it could be that greater use of CLT drives more trade in architectural design, timber engineering and construction services.

Global ICT market

Image: courtesy of Acton Ostry Architects

Supporting the Structure of Rural Economies

CLT was pioneered and promoted in Europe in part to bolster rural employment in the timber industry. Though it is also traded, being close to construction is a big advantage in the timber industry. European companies, which dominate their own market and supply American developers, are starting to build mills in the United States to meet growing demand. Austrian firm KLH partnered with International Beams in Dothan, Alabama, to open the first CLT plant east of the Rocky Mountains utilizing the Southern Yellow Pine native to the region.

To support more CLT production in rural economies, the United States is in the process of updating U.S. building codes to expand the use of CLT, as the International Building Code has already done. The 2018 Farm Bill contains provisions from the Timber Innovation Act intended to advance domestic research and development of further applications for structural wood in the building sector.

The United States isn’t alone in its efforts to build CLT capacity. Japan’s Forest Agency instituted a road map in 2014 for greater utilization of CLT as a follow up to Japan’s Promotion for the Use of Wood in Public Buildings Act. The agency provides subsidies to drive the establishment of CLT facilities with a target of increasing the country’s CLT production capacity to supply both the domestic and international markets. Through the effort, the government also seeks to support employment of women in rural areas, including through encouraging female lumberjacks.

A Breath of Fresh Air

In responding to industry feedback surveys, customers say wood construction, exposed structural wood and biophilic design have a positive impact on their shopping experience because such structures are ecological, healthful and warm. Some studies even suggest wood is a multi-sensory experience for occupants, evoking a sense of calm that can lower blood pressure.

As for environmental benefits, CLT emits less carbon dioxide during the manufacturing phase and finished buildings made with CLT even help sequester existing carbon for a longer period. Murray Grove in London was the first tall urban housing project to be constructed entirely from CLT. Due to its wooden construction, it was calculated to be carbon negative from the start and will take twenty-one years before the building will even reach carbon neutrality, far less than if the building had used concrete. Even tearing down a CLT building at the end of its life is more environmentally friendly than taking down one made of traditional materials.

oregon-conservation-center-lever-architecture-usa_dezeen_2364_hero2
Photo credit: Lever Architecture, cross-laminated timber community center added to the The Nature Conservancy in Oregon.

Trade in Sustainability

A thriving wood industry must embrace sustainability by replanting and harvesting efficiently. The CLT process allows smaller diameter softwood trees to be utilized, more so than in most commercial timber. It also makes use of millions of acres of pine that have been killed by the pine beetle epidemic. Pine beetles have penetrated forests in all nineteen western states, some eastern states and Canada, effectively decimating some 88 million acres of timber. Processing the downed trees mitigates some of the carbon emitted by the decaying wood, which remains strong enough to be useful in CLT processing for up to two years.

Cross-laminated timber provides many possible benefits, including reduced costs, rural employment, strength, fire-resistance, beauty and a sense of being closer to nature. We can also credit trade in CLT with stimulating a global movement that could help all of us live and work more harmoniously on this planet.

The author began her U.S. Government career in the U.S. Department of Commerce, International Trade Administration’s Forest Products division and is still convinced this industry has the best site visits and field trips.

Feature image: The Kajstaden Tall Timber Building by CF Møller Architects in the Swedish city of Västerås.

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Sarah Smiley is a strategic communications and policy expert with over 20 years in international trade and government affairs, working in the U.S. Government, private sector and international organizations.

This article originally appeared on TradeVistas.org. Republished with permission.