No traffic sensors *do not work by magnetism* - as the name implies - induction loop sensor, its inductance - like a metal detector, so they can detect many types of metals. In fact if you read the article that Becky posted the sensors should be better at detecting aluminum than steel. The only reason a car is easier to detect than a bike is the size of the vehicle. The sensitivity is adjustable and there seems to be no reason that a good traffic engineer should not be able to set them up to detect bicycles of all types - with perhaps the exception of a person riding a full carbon bike with carbon wheels, spokes and cranks.
I have no problems being detected around here with my carbon bike - I have aluminum rims and spokes. In fact the lights I tend to have trouble with are the optical ones as I am too small to be detected by the camera.....





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