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Motown’s new headache: Aluminium – Times of India


CHENNAI: After semi-conductor shortage and steel price increase, a new raw material is giving Motown headaches – aluminium. Auto analysts say with secondary aluminium imports becoming more expensive, auto companies could face a cost pinch to add to the chip shortage and steel price pressures. Global aluminium prices have more than doubled since April 2020. “Significant part of this rally has come over the last 4 months,” said Crisil director Isha Chaudhary. JATO Dynamics president Ravi Bhatia said that, so far, the chip shortage may have got most of the attention. “But right now, it is shortage of aluminium that is going to be the real challenge. Availability of ships for material transportation adds to the problem. Given the supply constraints and logistics challenges, vehicle prices may take 16-18 months to adjust,” he said. Auto analysts say China’s power crisis has triggered a shortage of magnesium, which is a key component for aluminium alloys used to make critical auto parts like gearboxes, seats and fuel tank lids. Around 85% of magnesium comes from China and its stocks are already low in Europe and the US, triggering fears of car production being hit by this shortage as global tier-1 parts makers take a supply knock. “In order to improve fuel efficiency and make the vehicles lighter, the content of aluminium in automobiles has increased over years,” said India Ratings & Research associate director Shruti Saboo. Global analysts are already red-flagging this new problem globally.


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