Magnesium Price Spike: A Flash in the Pan?

In September 2021, the town of Yulin in Northwest China’s Shaanxi province substantially reduced its production of magnesium carbonate (MgCO3), falling at least 70 percent from market expectations. Although production generally recovered within a few weeks, China is the world’s largest magnesium producer, and this brief shutdown created substantial ripple effects throughout the downstream industries which incorporate magnesium into their products. Notably, the experience of the global automotive sector, which includes electric vehicle producers, highlights the effect that dwindling magnesium supplies can have on downstream production as magnesium is integral to strengthening and lightening of aluminum. This working paper will provide a snapshot of the magnesium market at the end of 2021 and place the brief shutdown in China in context. It will begin with an introduction to the magnesium metal and a history of its production processes, and will explore the current market for magnesium. It will then provide an overview of major global magnesium producers and a closer look at U.S. production and the domestic magnesium market. The paper will then note contemporary supply chain challenges in the magnesium sector and conclude with a brief exploration of the potential future of the industry.