What’re Behind Closures of 13 Nickel Smelters in Indonesia? SMM Reports

Published: Jun 20, 2017 14:27
Market news that 13 nickel smelters in Indonesia have ceased operations due to a plunge in nickel market, and those on-line producers are running at a loss.

SHANGHAI, Jun. 20 (SMM) – Market news that 13 nickel smelters in Indonesia have ceased operations due to a plunge in nickel market, and those on-line producers are running at a loss. This became a heatedly-discussed topic after releasing of the news.

What’re behind the closures of those 13 smelters? 

What’s Price Outlook for Nickel Market for Rest of June? SMM Reports

Rome is not built in one day. 

Nickel ore market, nickel’s raw material, has changed in a fundamental way following Indonesia’s new export policy. Indonesia introduced its export ban on raw ore in early 2014, but relieved export policy early this year by allowing nickel ore exports under certain conditions. This, coupled with appointment of new environment minister in the Philippines, has increased market expectations over more ore supply from world’s two nickel ore suppliers, weighing down nickel prices. 

Indonesia Cuts Base Export Prices of Nickel Ore, Why?

The 13 smelters have a combined annual capacity of 750,000 tonnes of NPI, according to the news, but owners of smelters were not disclosed. According to SMM sources, some nickel smelters in Indonesia have stopped production since last year due to sluggish prices, involving less than 10,000 tonnes (Ni content). The closures of 750,000-tonne capacities should include newly-constructed ones. 

The news also disclosed that 12 other Indonesian nickel smelters remain online, but are operating in the red, and according to SMM sources, there are 6 on-line smelters in Indonesia now. At present, market focus is now on whether or not more new producers will join in production suspension. There is little possibility for RKEF NPI producers to stop production when nickel prices are at around $9,000/t, but some BF NPI producers did delay commissioning of production due to sluggish prices.  

In other news, Indonesia’s NPI capacity will keep growing in 2017, and reach about 285,000 tonnes (Ni content), up 146,000 tonnes on a yearly basis, and output will grow to 160,000 tonnes, up 79,000 tonnes from 2016’s. 

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Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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