H1 2024 ended. According to SMM, the current Indonesian laterite nickel ore RKAB approval quota for 2024 is approximately 220 million wmt. The current approval quotas for 2025 and 2026 are slightly lower than this figure, both around 200 million wmt. Against this backdrop, the overall supply of Indonesian laterite nickel ore was tight in H1 2024. Especially in Q2, the premium of Indonesian laterite nickel ore for domestic trade continued to rise amid limited circulating supply of laterite nickel ore in the Indonesian market and significant consumption of nickel ore inventories by Indonesian smelters.
In June, the HPM of 1.6% grade Indonesian laterite nickel ore for domestic trade increased by nearly $3 MoM, a rise of about 8.4% MoM. The mainstream transaction premium gradually climbed from around $13/wmt in early June to around $15/wmt. Some long-distance cross-island transactions had even higher premiums due to transportation costs. In addition, since most smelters in Indonesia offered rewards to mines with lower Si-Mg ratio and higher supply, their laterite nickel ore costs rose further. In contrast, domestic NPI prices ran weak in June, further squeezing the profits of smelters.
Entering July, although HPM saw a slight decline influenced by LME nickel prices, the current premium of laterite nickel ore in the Indonesian market has not shown signs of falling. Additionally, the continuous decrease in nickel ore shipping efficiency caused by weather became a major factor slowing the supply increase of Philippine laterite nickel ore, an important source of laterite nickel ore supply in the Indonesian market. As of the end of June, it is estimated that over 130 ships have set sail from the Philippines in June, with an expected port arrival rate lower than 95% and a loading rate lower than 60%. It is expected that weather will continue to impact the supply increase of Philippine nickel ore in July. Limited by the dual supply pressures from the Indonesian and Philippine laterite nickel ore, the price of laterite nickel ore in the Indonesian market is expected to remain strong in the short term, elevating the costs of Indonesian NPI smelters.
