[Nickel Ore Market Weekly Review] Supply Tightness of Indonesia's Local Ore Continues, Costs and Sentiment May Both Strengthen Under Policy Influence

Published: Mar 21, 2025 17:43

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Indonesia's Local Ore Supply Tightness Continues, Costs and Sentiment May Both Strengthen Under Policy Influence

Philippine Nickel Ore Costs Rise Again, Prices Fluctuate Upward

This week, the prices of low and high-grade Philippine nickel ore remained stable, while the prices of medium to high-grade Philippine ore saw a slight increase. The main reasons for this are twofold: 1. The price of Indonesian nickel ore, as an exporting country, has climbed and is expected to rise further, providing some support to the export prices of Philippine nickel ore. 2. From a supply and demand perspective, this month, the Surigao region began reporting and shipping, but due to weather conditions, the recovery of supply was slow. On the demand side, most domestic NPI plants still have low inventory levels, leading to strong just-in-time procurement needs for raw materials. Although the current rise in high-grade NPI prices has brought some profit recovery, domestic smelters remain in losses, limiting their ability to purchase high-priced nickel ore. In terms of ocean freight rates, they rose again during the week due to the shift in shipping locations and poor weather, further increasing the cost of importing nickel ore. Overall, under the influence of a strong supply and weak demand pattern, along with policy disruptions, Philippine prices have increased. SMM expects that subsequent Philippine ore prices may stabilize and fluctuate upward.

Indonesia's Local Ore Supply Remains Tight, Policy Impact May Strengthen Both Costs and Sentiment

Current market transaction prices: For pyrometallurgy ore, SMM Indonesia's local ore 1.6% weekly price is $49.5/wmt; for hydrometallurgy ore, SMM Indonesia's local ore 1.2% grade weekly price is $26.5/wmt. The mainstream premium for Indonesian nickel ore in March held steady at $19-21/wmt. The slight increase in CIF prices mainly came from the benchmark price for Indonesia's local ore in the second half of March, released by the Indonesian Ministry of Energy and Mineral Resources on the 15th, which saw a small increase from the previous period, with 1.2% grade ore up $0.26 and 1.6% grade up $0.46. From a supply perspective, the extended rainy season in Sulawesi this year has affected the mining and transportation of nickel ore, slowing the recovery of supply in major mining areas like Sulawesi. Additionally, the end of March coincided with the Eid holiday, exacerbating the supply tightness. On the demand side, Indonesian NPI smelters generally have low inventories and still need to restock, with high purchasing sentiment downstream. SMM expects that the supply of nickel ore may continue to be tight. In terms of policy, this week, the Indonesian Ministry of Energy and Mineral Resources signaled that the PNBP policy might be implemented before Eid. If the policy is implemented as scheduled, the sales costs for nickel mines will increase, coupled with the continuous rise in NPI and MHP prices. Given the current market situation, mines have strong bargaining power, and the additional costs from the policy may largely be passed on to downstream enterprises, strongly supporting nickel ore prices. Overall, SMM expects that the price of Indonesia's local nickel ore may continue to rise.

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