China to see nickel ore deficit in 2019 if Indonesia advances export ban

SHANGHAI, Aug 7 (SMM) – This year is likely to see a supply deficit of nickel ore in China if Indonesia stops issuing new export quotas to bring forward the planned ban on mineral ore exports from 2022.

As of the end of July, Indonesia has issued 66.38 million wmt of nickel ore export quotas since it allowed a five-year grace period for ore exporters in return for investment in processing capacity in 2017, and 20.45 million wmt of which has neither expired nor been used yet, showed SMM calculations.

If Indonesian Ministry of Energy and Mineral Resources (MEMR) no longer approves new export quotas, the country is expected to export another 12.01 million wmt of nickel ore by the expiration of the remaining quotas, in view of the shipment suspension or limited capacity of some mines.

Adhikara Cipta Mulia mine has suspended shipments on formality issue, while limited shipment capacity will deter mines like Tiran Indonesia, Sulawesi Resources, Sambas Minerals Mining from using up their quotas.  

Nickel ore exports from Indonesia is expected to stand at 9.73 million wmt in August-December, bringing Indonesia’s exports of medium- to high-grade nickel ore for 2019 to 23.66 million wmt. This is a prudent forecast, as some mines may ramp up shipments.

The expected imports from Indonesia are unlikely to meet demand in China, resulting in a supply deficit for the year. This compared to an oversupply of 60,000 mt that SMM estimated in late July if Indonesia continues to renew export permits.

In the first six months of 2019, China imported 12.38 million wmt of lateritic nickel ore, up 32% from the first half of 2018 and 20% from the second half of 2018. Medium- to high-grade cargoes accounted for 97%.

Nickel prices earlier this week received a boost from the news that Indonesia may advance the ore export ban from January 2022.

This followed by reports that the Indonesian Nickel Miners Association sent a letter to President Joko Widodo asking the government to allow low-grade nickel ore exports for all miners and to regulate domestic pricing for the mineral.