【SMM Analysis】Philippines & Indonesia Nickel Ore Prices Weaken as Rainy-Season Supply Tightens and HPM Falls

Philippines: Nickel Ore Prices Continue to Decline as Rainy-Season Supply Tightness Fails to Offset Weak Demand

On the pricing front, Philippine nickel ore prices continued to decline across all grades this week, extending the market’s bearish trend. For low-grade ore, 0.7% Ni, Al ≥5% fell to US$16–17/t, with a midpoint of US$16.5/t, down US$1/t from the previous period. 0.7% Ni, Al <5% declined to US$22–24/t, with a midpoint of US$23/t, also down US$1/t. 0.9% Ni, Al 7% min dropped to US$15–17/wmt, with a midpoint of US$16/wmt, down US$1/wmt, while 0.9% Ni, Al 7% max declined to US$22–23/wmt, with a midpoint of US$22.5/wmt, likewise down US$1/wmt.

The decline was more pronounced for medium- to high-grade ore. 1.3% Ni fell to US$27–29/wmt, with a midpoint of US$28/wmt; 1.4% Ni declined to US$37–39/wmt, with a midpoint of US$38/wmt; 1.5% Ni dropped to US$44–47/wmt, with a midpoint of US$45.5/wmt; and 1.8% Ni fell to US$72–74/wmt, with a midpoint of US$73/wmt. All of these grades were down US$2/wmt from the previous period.

The continued weakness in Philippine nickel ore prices is mainly driven by cautious downstream procurement and broader pressure across the regional nickel ore market. Downstream raw material inventories in China remain relatively ample and are estimated to be sufficient for around two months. Spot purchases are therefore largely limited to essential restocking needs. With no significant increase in demand, buyers have shown limited willingness to accept higher-priced imported ore, placing continued downward pressure on quotations from Philippine mines. At the same time, freight rates from the Philippines to China remain relatively high, meaning reductions in FOB prices have not fully translated into a stronger purchasing advantage on a CIF basis, further limiting buying interest in imported ore.

On the weather front, major nickel-producing regions in the Philippines continue to be affected by the Intertropical Convergence Zone (ITCZ) and seasonal rainfall. Parts of Palawan, Visayas, and Mindanao have continued to experience rainfall and thunderstorms. Zambales has been more noticeably affected by the rainy season, with mining operations, inland transportation, and port loading disrupted at some mines, reducing actual shipment capacity. In comparison, areas such as Palawan have maintained a certain level of shipments. As a result, overall Philippine supply has not yet faced a widespread shortage, although regional supply divergence has become more pronounced.

From a supply-demand and market sentiment perspective, reduced supply from Zambales has so far failed to provide meaningful price support. The main reasons remain ample downstream inventories in China and weak demand for imported ore. Meanwhile, continued declines in Indonesian nickel ore prices have further weakened the competitiveness of Philippine ore in the Indonesian market. With Indonesia’s second-half October HPM officially lowered, the regional pricing center has moved further downward. If Indonesian domestic ore prices remain under pressure, Philippine miners may need to further adjust FOB quotations to maintain transaction volumes.

In the short term, the Philippine nickel ore market is expected to remain weak. Key factors to monitor include the recovery of shipments from Zambales, actual shipment volumes from Palawan, freight rates to China, and movements in Indonesian nickel ore prices.

Indonesia: Nickel Ore Prices Accelerate Downward as Second-Half October HPM Is Cut Across the Board

On the pricing front, Indonesian nickel ore spot prices continued to weaken this week. According to the latest SMM data, average prices for Ni 1.2% Limonite, Ni 1.3% Saprolite, Ni 1.4% Saprolite, Ni 1.5% Saprolite, and Ni 1.6% Saprolite were US$25.5, US$27.5, US$47.1, US$52.5, and US$57.1/wmt, respectively. Compared with the previous levels of US$26.5, US$28.5, US$51.8, US$58.5, and US$63.4/wmt, prices fell by US$1.0, US$1.0, US$4.7, US$6.0, and US$6.3/wmt, respectively. The steeper declines in medium- to high-grade saprolite indicate that the market’s pricing center has shifted further downward.

On the policy pricing front, Indonesia’s Ministry of Energy and Mineral Resources (ESDM) has officially published the nickel ore benchmark prices for the second half of October 2026. The nickel HMA for the second half of October was set at US$15,847.67/t, down US$475/t, or 2.91%, from US$16,322.67/t in the first half of October.

Corresponding HPM prices were also lowered. Ni 1.2% was set at US$22.44/wmt, down US$0.75/wmt; Ni 1.3% at US$44.58/wmt, down US$1.49/wmt; Ni 1.4% at US$50.05/wmt, down US$1.61/wmt; Ni 1.5% at US$54.48/wmt, down US$1.74/wmt; and Ni 1.6% at US$59.12/wmt, down US$1.88/wmt. The renewed decline in both HMA and HPM has provided miners with a lower pricing benchmark and further reinforced bearish market expectations.

On the supply side, supplementary 2026 RKAB quotas are being released gradually, and market attention has shifted from quota approval itself to whether additional quotas can actually be converted into higher production and shipments. New RKAB approvals will not immediately translate into spot supply, as mines still need to arrange equipment deployment, road maintenance, stockpile preparation, and logistics. However, as mines receiving additional quotas gradually resume or expand production, actual nickel ore supply could increase further during the fourth quarter. Against the backdrop of weak demand, expectations of additional supply continue to weigh on ore prices.

On the demand side, raw material inventories at Indonesian smelters remain relatively sufficient and are estimated to cover around two months of consumption. As a result, there is limited incentive for aggressive near-term restocking, and spot purchases are mainly focused on meeting essential production requirements. At the same time, the current price correction is showing clear differentiation by ore grade. Prices for Ni 1.4–1.6% saprolite have fallen much more sharply than those for low-grade limonite, suggesting that the previously relatively tight high-grade ore market structure is changing and that bargaining power is shifting further toward buyers.

Regarding El Niño and water availability, Indonesia is currently facing persistent dry conditions and shortages of industrial water rather than the heavy rainfall experienced in the Philippines. Industrial water constraints in nickel-processing hubs such as Morowali have already affected operations at some smelting facilities. According to SMM surveys, the operating rates of some RKEF production lines have fallen to around 30–40% of normal levels since September 22. However, the impact currently remains limited to certain production lines and does not represent a broad reduction across the entire industrial park.

The main impact of water shortages on the nickel ore market is on the demand side. As RKEF production lines reduce operating rates, their nickel ore consumption declines accordingly, reducing spot purchasing demand from some smelters. Given that raw material inventories are already relatively ample, if water restrictions persist for an extended period, actual ore consumption by smelters could fall further below previous expectations. At present, expectations of increased supply from additional RKAB quotas are coinciding with weaker demand caused by reduced RKEF operating rates, placing pressure on spot ore prices from both sides of the supply-demand balance.

From a policy and market sentiment perspective, the 2.91% decline in second-half October HMA, broad-based cuts in HPM across all grades, continued release of additional RKAB quotas, and ample smelter inventories leave little room for a meaningful near-term recovery in ore prices. In particular, the significant decline in Ni 1.4–1.6% saprolite spot prices this week indicates that expectations of lower HPM levels and increased supply are already being reflected in actual market quotations. Meanwhile, low operating rates at some RKEF lines in Morowali are further reducing ore consumption and keeping market sentiment cautious.

Looking ahead, the Indonesian nickel ore market is expected to remain weak in the short term. Following the official reduction in the second-half October HPM, market attention will shift to the extent to which the new benchmark prices are transmitted into actual mine transactions and how quickly additional RKAB quotas are converted into real production and shipments. On the demand side, key factors to watch include smelter inventory drawdowns, water availability in Morowali, and operating rates at affected RKEF lines. If mine supply continues to increase while smelter purchasing demand remains constrained by high inventories and water shortages, spot nickel ore prices could face further downside pressure.