【SMM Analysis】Weekly Review of Indonesian Nickel Market-2.28

Nickel Ore

The Premium for Indonesian Domestic Trade Laterite Nickel Ore Continues to Rise, but the Growth Rate Slows Down

The Premium of Indonesian Domestic Trade Laterite Nickel Ore Continues to Rise, with Slower Growth Rate

Current market transaction prices: For pyrometallurgical ore, the Indonesian domestic trade ore premium remained at $18-19 in February this week. With March approaching, the mainstream premium for Indonesian nickel ore is expected to rise again. The procurement intention price for nickel ore in the Sulawesi Island industrial park is tentatively set at above $19-20 for March. However, most mid-tier pyrometallurgical smelters' raw material inventories have not yet reached safe levels, leading to a certain level of acceptance for premiums above $20.

For hydrometallurgical ore: Mines, under limited quota conditions, tend to prioritize selling more profitable pyrometallurgical ore, actively reducing the sales volume of hydrometallurgical ore. Coupled with strong production expectations for numerous hydrometallurgical projects this year and next, the demand for hydrometallurgical ore is rapidly and continuously increasing within the year. In the medium and long-term, the price increase rate of hydrometallurgical ore may surpass that of pyrometallurgical ore.

In terms of supply: This week, there was little change in mine shipments. Mines approved through the SIMBARA system showed relatively strong willingness to sell before Eid al-Fitr. Starting in March, as the rainy season in Sulawesi gradually ends and ports reopen, subsequent shipment volumes are expected to increase.

On the demand side: Mid-tier smelters are expected to make just-in-time procurement in March. Combined with the continuous rise in downstream nickel-iron prices, which has led to profit recovery, demand support remains.

Additionally, on February 17, Indonesian President Prabowo issued Presidential Regulation No. 8 of 2025, announcing the Natural Resources Export Foreign Exchange Control Policy (DHE SDA). This policy may cause price fluctuations in Indonesian commodities such as coal, palm oil, and nickel ore, leading to a short-term increase in nickel prices during the week.

In summary, the HPM benchmark price is expected to remain stable in March. Upstream shipment volumes are expected to increase, combined with sustained demand. However, due to the overall tight supply rhythm of nickel ore, the absolute price of Indonesian nickel ore is expected to rise further, though the rate of increase may slow down. Moving forward, it is necessary to continue monitoring the specific changes in nickel ore market circulation brought about by the end of the rainy season in Sulawesi.

High-Grade NPI

High-Grade NPI Market Transactions Hit New Highs; Prices Expected to Remain Relatively Stable with Strong Trend Under Cost Support

During the week, the Indonesian NPI FOB index increased by $1.1/mtu WoW. The high-grade NPI market continued its upward trend this week.

Supply side, current nickel ore supply from Indonesia has not increased significantly, leaving smelters with insufficient raw materials. Additionally, adjustments to production loads on certain production lines have led to a decline in output.

Demand side, the stainless steel market is in a recovery phase after the Chinese New Year. With steel mills resuming operations and downstream demand improving, crude steel production is expected to increase further, supporting demand for high-grade NPI. Transaction prices in the market hit new highs during the week.

Cost side, based on nickel ore prices from 25 days ago, the cash cost of high-grade NPI production indicates that smelters' losses narrowed further this week.

Raw material side, prices of auxiliary materials such as coking coal and thermal coal continued to decline this week, influenced by reduced downstream molten steel production and upstream supply surplus. Auxiliary material prices were adjusted downward again during the week. The alleviation of smelters' losses this week was mainly due to the continued rise in high-grade NPI prices and the further easing of auxiliary material costs.

Looking ahead to next week, auxiliary material prices are expected to remain stable with a weak trend due to still sluggish downstream demand. Nickel ore prices are likely to remain stable. Under the expectation of a rising market center for high-grade NPI, smelters' losses may narrow further. SMM expects high-grade NPI prices to remain relatively stable with a strong trend in the short term.

REFINED NICKEL

One project in Indonesia is still ramping up production

This month, the Dingxin project in Indonesia continued full-capacity production, supplying 4,000 mt of refined nickel to the market monthly. Additionally, the Yongheng project is in the process of ramping up production and is expected to reach full capacity (4,000 mt/month) in March-April.