Planning to buy a car or a new bike after a few months? You might face troubles like a long waiting period, a substantially higher price compared to now. Thinking, what could be the reasons behind this? The global auto industry is awaiting another crisis. Along with the ongoing semiconductor crisis hurting the production of automobiles around the world, this time the auto sector is awaiting another severe headwind in form of aluminium shortage, reports Financial Times.
Around 35 per cent of magnesium demand comes from the auto sector. Magnesium is a key material used in making automobile grade aluminium. Almost 90 per cent of global magnesium production is attributed to China. Due to the severe power crisis in the country, the Chinese government has ordered to close around 35 of its 50 magnesium smelters until the end of 2021.
With 70 per cent of China’s magnesium smelters closed, the magnesium production in the country is going to be hurt severely. This means the production of aluminium alloy will be limited. With aluminium being used for making automotive sheets and various components for the auto industry, the sector will be badly hurt. In short, if the magnesium supply stops, the entire auto industry will potentially be forced to shut down the plants.
The semiconductor shortage is still very much real and hurting the auto industry production badly. The global auto industry is estimated to lose more than 10 lakh unit vehicle production this year alone due to the chip crisis. Adding salt to the wound, the aluminium shortage can prove havoc for the already limping auto sector.
The crisis could result in a significantly longer waiting period for the popular cars, much higher price for the vehicles and in the worst case, the auto industry and the component manufacturers will be forced to shut down their manufacturing plants for an unknown period.
Source : Hindustan Times
