[SMM Analysis] Weekly Review of the Indonesian-1.24 Nickel Market for the second Week of 2025

Nickel Ore

Indonesian Domestic Trade Laterite Nickel Ore Transactions Were Active This Week, Prices Fluctuated Upward

In terms of supply: The currently approved quota under the 2025 RKAB stands at 298 million wmt. In terms of demand: Indonesian pyrometallurgy smelters have started procuring nickel ore for February. Additionally, due to inventory levels, there remains some stocking demand from local Indonesian smelters. The market still holds certain expectations regarding the uncertainty of Indonesian policies, and the HPM benchmark price for February has seen a slight decrease. Currently, the bargaining between upstream and downstream players is quite evident. In summary, SMM expects a potential increase in premiums for February. Influenced by policy uncertainties and post-holiday stocking demand from downstream, Indonesian nickel ore prices are expected to have some room for growth. However, as quotas for H1 have been approved, supply may remain relatively ample, limiting the price increase for Indonesian domestic trade ore. Looking ahead, it is expected that nickel ore CIF prices will remain stable with an upward bias in the latter half of this month. The stance of Indonesian policies and the progress of temporary quota approvals will continue to have a significant impact on the global nickel supply and nickel prices.

For the full year, according to SMM statistics, in 2025, SMM estimates that the total annual demand for nickel ore in Indonesia will be approximately 312 million wmt, of which around 169 million wmt will come from demand for Indonesian NPI, 47 million wmt from the incremental demand for Indonesian nickel matte, and 89 million wmt from the ramp-up of Indonesian MHP. It is expected that Indonesia's nickel ore imports this year may increase to 13 million wmt. Overall, most RKAB approvals in Indonesia are proceeding as scheduled, and shipments from mines approved through the SIMBARA system are generally normal. Nickel ore quotas for H1 2025 appear relatively ample compared to the same period last year. However, as new smelting projects in Indonesia come online or ramp up during the year, there may still be short-term tightness in nickel ore supply. In the medium and long-term, the Indonesian government is expected to maintain a cautious approach to approving temporary quotas. The approval status of temporary quotas in mid-year and beyond will significantly influence the overall nickel ore supply in H2.

High-Grade NPI

Market Resources Tighten Ahead of Chinese New Year, Post-Holiday Prices Expected to Remain Stable
The Indonesian NPI FOB index increased by $1.3/mtu WoW. This week, high-grade NPI prices further recovered.

Supply side, recent rainfall in Indonesia has eased compared to earlier periods, and some enterprises, driven by profits, are not expected to reduce production. Demand side, market transactions weakened during the week. As the Chinese New Year holiday approaches, market inquiry activity was sluggish. Coupled with a high proportion of long-term contracts in stainless steel mills and strong market expectations for the future, prices recovered due to limited market circulation resources. High-grade NPI prices are expected to remain stable after the holiday.

This week, the average discount of high-grade NPI to refined nickel narrowed to 319.55 yuan/mtu, a reduction of 20.1 yuan/mtu WoW.

During the week, high-grade NPI prices edged up slightly. Prices rose modestly due to tight market circulation resources.

For refined nickel, the Indonesian Nickel Miners Association officially announced this week that the 2025 RKAB quota has been approved at 298 million wmt. Earlier news about tightened nickel ore supply from Indonesia had pushed nickel prices higher, but the announcement of the new quota exerted downward pressure on nickel prices. Additionally, exports remain profitable, and LME nickel inventory continues to rise, creating significant resistance to LME nickel price increases, which began to pull back during the week.

This week, the average discount of high-grade NPI to refined nickel fluctuated and narrowed.

In the short term, high-grade NPI prices are likely to continue rising due to tight market circulation resources. Refined nickel prices, however, may face downward pressure due to ongoing inventory buildup and bearish factors related to nickel ore. The average discount of high-grade NPI to refined nickel is expected to continue narrowing in the near term.