[SMM Analysis] APNI Indicates That the Indonesian Government Has Approved a 2025 Nickel Ore Mining Quota of 298.5 Million wmt, Analysis of Short-Term and Long-Term Impacts on Nickel Prices

APNI Indicates That the Indonesian Government Has Approved a 2025 Nickel Ore Mining Quota of 298.5 Million wmt, Analysis of Short- and Long-Term Impacts on Nickel Prices

Supply Side

1. Supply Increase: Indonesia, the world's largest nickel ore supplier, accounts for 63% of global nickel ore production. The 2025 nickel ore mining quota has been increased from 271.89 million wmt in 2024 to 298.5 million wmt, directly leading to a rise in global nickel ore supply.

2. Market Expectation Shift: Previously, there were market rumors that Indonesia would cut nickel ore production to 150 million mt, but the approved quota of 298.5 million wmt is significantly higher than market expectations. This news will alter market expectations of a supply deficit, thereby exerting upward pressure on nickel prices.

3. Resource Sustainability: Despite the increased quota, the Indonesian government has stated that mining activities will still be managed through performance evaluations and other measures to prevent resource depletion caused by overexploitation. This indicates the government's focus on maintaining nickel balance, and further attention is needed on the implementation of specific policies.

Demand Side

1. Demand Slowdown: Amid a challenging global economic environment, downstream demand for stainless steel and batteries has grown but remains sluggish, while alloys are experiencing stable growth. This results in no significant increase in demand. Coupled with the surplus in nickel inventory, the supply increase is unfavorable for nickel price growth.

Impact of Supply-Demand Relationship on Nickel Prices

1. Short-Term Impact: Under the dual effects of increased supply and slow demand growth, the supply-demand balance in the nickel market will tilt toward a supply surplus. This will exert some upward pressure on nickel prices, but the Indonesian government's management of mining and adjustments in market expectations may partially mitigate this pressure.

2. Long-Term Impact: In the long term, the Indonesian government's strategy of adjusting market supply and demand by increasing quotas may further exacerbate the global nickel market surplus. Although Indonesia's sustainable resource management efforts contribute to supply stability, weak demand and inventory accumulation will exert long-term upward pressure on nickel prices.

Additionally, it is worth noting that the nickel mining quota in Indonesia this year—whether it will indeed reach 298 million wmt—remains subject to field trip verification, with the possibility of the government deciding to increase or cut production.