Nickel Price and HPM Decline

During China's National Day holiday , Indonesia's nickel market remained relatively quiet in terms of physical trading, but the period highlighted a clear deterioration in upstream market conditions. Nickel prices weakened, Indonesian nickel ore HMA and HPM were reduced, and the premium for mainstream saprolite turned negative. At the same time, the Indonesian government signalled that it may take measures to address the country's large downstream capacity and global nickel oversupply.

The first-half October nickel HMA was set at $16,322.67/mt, down $375.33/mt, or 2.25%, from $16,698/mt in the second half of September. This was accompanied by a broad decline in Indonesian nickel ore HPM.

For the first half of October, HPM was set at:

• Ni 1.2%: $23.19/wmt, down $1.70/wmt
• Ni 1.3%: $46.07/wmt, down $3.13/wmt
• Ni 1.4%: $51.66/wmt, down $2.17/wmt
• Ni 1.5%: $56.22/wmt, down $2.28/wmt
• Ni 1.6%: $61.00/wmt, down $2.39/wmt

The lower HMA reflects weaker nickel prices and has directly reduced the benchmark value of Indonesian nickel ore.

Saprolite Premium Turns Negative

The more significant development in the physical ore market was the sharp deterioration in the premium structure.

SMM's pricing showed 1.5% Ni nickel ore at around $54.2/wmt, compared with an HPM of $56.22/wmt. This means the mainstream 1.5% Ni ore market was trading at approximately a $2/wmt discount to HPM, from previously flat HPM. Other grades also weakened. SMM assessed 1.6% Ni ore at $59/wmt against an HPM of $61/wmt, while 1.2% Ni ore fell to $25.5/wmt from $26.5/wmt in late September.

The emergence of transactions below HPM is an important signal that the upstream market has shifted from the tight conditions seen earlier in the year toward a more supply-pressured environment. Additional ore availability and weaker smelter purchasing interest have reduced miners' pricing power.

Philippine Supply Faces Weather Risks, but No Major Disruption

Meanwhile, Philippine nickel ore remained an important alternative source of feedstock for Indonesian smelters, although weather conditions created some short-term logistical risks during the holiday.

Reports show scattered rains and thunderstorms across Caraga and Northern Mindanao on October 3–5 due to the trough of Typhoon Choi-Wan. On October 6–7, the ITCZ brought further scattered rainfall to Caraga, Northern Mindanao and Palawan.

These areas include important nickel-producing regions such as Surigao and Palawan, where prolonged rainfall can affect mine-road transportation, ore hauling, barging and vessel loading. SMM assessed the weather risks for October 5–11 as manageable, with localized disruptions possible but no major supply interruption expected.

Therefore, Philippine weather may provide some short-term support to ore availability if rainfall intensifies, but it is not currently sufficient to offset the broader downward pressure in the Indonesian nickel ore market.

What Happened During the Holiday?

The market did not see a major physical supply disruption during the October 1–7 holiday. Instead, the key change was in market sentiment.

With nickel prices falling and ore availability gradually improving, buyers became more cautious and increasingly focused on lower-priced cargoes. Sellers, meanwhile, faced greater pressure to adjust offers to secure transactions.

The combination of a lower HMA, lower HPM and negative ore premiums suggests that the market is now increasingly concerned about demand rather than simply the availability of nickel ore.

Government Signals Focus on Oversupply

Against this backdrop, Indonesian Coordinating Minister for Downstreaming and Energy Transition Bahlil Lahadalia said on October 7 that the government is considering regulating nickel smelter utilisation when the global market is oversupplied.

Bahlil said that even if installed smelting capacity requires a large volume of ore, the government needs to consider global supply and demand for the final nickel products. The government is therefore considering regulating smelter production rather than automatically supplying enough ore for all installed capacity to operate at full utilisation.

Indonesia is also considering a moratorium or tighter controls on new smelters producing semi-finished nickel products, with greater emphasis on higher-value downstream industries. Bahlil cited global nickel oversupply of around 2.5 million tonnes as one reason for reconsidering the current downstream development model.

Market Expectations 

The market is likely to focus on whether the negative premium persists and whether the government's comments translate into concrete measures.

For the ore market, the immediate question is whether the approximately $2/wmt discount for 1.5% Ni ore represents a temporary adjustment or the beginning of a more sustained decline in premiums. If smelter demand remains weak while domestic ore availability continues to improve, sellers may face further pressure to reduce offers.

For the downstream market, attention will shift toward actual smelter operating rates and profitability. Any meaningful reduction in utilisation would directly weaken nickel ore demand and could put further pressure on saprolite prices.

The October 1–7 holiday period marked a notable deterioration in Indonesia's nickel ore market. The decline in nickel HMA to $16,322.67/mt, the corresponding reduction in HPM, and the emergence of a roughly $2/wmt discount for 1.5% Ni ore against HPM all point to weakening upstream market conditions.

The government's new focus on smelter utilisation and possible restrictions on additional semi-finished capacity also suggests that Indonesia is increasingly concerned about downstream oversupply.

Going forward, the market's expectations will centre on whether nickel prices can stabilise, whether ore premiums recover on the second phase of October, and whether Indonesia introduces concrete measures to curb excessive downstream production. In the absence of a meaningful improvement in nickel demand, the combination of lower nickel prices, weaker ore premiums and pressure on smelter margins could continue to weigh on the Indonesian nickel ore market. For Philippine ore, the market will monitor rainfall in Surigao, Palawan and other major mining areas. Any prolonged weather disruption could temporarily tighten regional ore supply, although current conditions remain manageable.