【SMM Analysis】Weekly Review of Indonesian Nickel Market-4.30

NICKEL ORE

Indonesia Nickel Ore Prices Edge Higher Amid Supply Constraints and Policy Changes

Nickel ore prices in Indonesia recorded a slight increase this week.

For pyrometallurgical ore, the domestic trade premium for May ranged between USD 26 to USD 28 per wet metric ton (wmt). According to data from SMM, the delivered price for 1.6% grade Indonesian nickel ore reached USD 52.6 to USD 54.6/wmt, marking a week-on-week increase of USD 1.1/wmt, or approximately 2%.

In contrast, prices for hydrometallurgical ore showed a slight decline, with SMM reporting delivered prices for 1.2% grade ore in the range of USD 23.5 to USD 24.5/wmt.

In the pyrometallurgical segment, the increase in nickel royalties under the PNBP regulation officially took effect on April 26, leading to higher sales costs for nickel ore and strengthening miners’ willingness to hold firm on prices. On the supply side, persistent rainfall in Sulawesi continues to disrupt mining operations, and the upcoming rainy season in Halmahera is expected to further impact ore supply. On the demand side, downstream NPI (nickel pig iron) producers maintain rigid demand for procurement. Moreover, raw material restocking by smelters in Q1 was less than optimal, leading to continued tight supply conditions.

Despite a decline in LME nickel prices in April, the HPM (High-Price Market) price for 1.6% grade Indonesian ore in the first half of May was reduced by USD 0.87/wmt compared to the second half of April, diverging from the trend in spot market prices. Consequently, the premium for nickel ore has been raised once again. Overall, pyrometallurgical ore prices saw another slight increase this week, while downstream NPI producers face pressure from both rising costs and limited supply, putting them in a challenging position.

As for hydrometallurgical ore, current supply tightness has not become evident. On the demand side, a recent accident at a wet processing project in the Sulawesi Industrial Park has impacted demand from Indonesian HPAL (High Pressure Acid Leach) smelters in April. As a result, market sentiment for hydrometallurgical ore remains weak, and prices may experience a slight downward adjustment in the near future.

NPI (Nickel Pig Iron)

High-Nickel Pig Iron Prices Remain Under Pressure Amid Stronger Buyer Bargaining

This week, the decline in high-nickel pig iron (NPI) prices has narrowed compared to the previous week. On the supply side, Indonesian nickel ore premiums remained firm to slightly stronger, indicating a possible upward shift in smelter cost lines. However, with finished product prices remaining weak, output is expected to decline slightly. On the demand side, the stainless steel market remained relatively subdued ahead of the May Day holiday. Some downstream demand had already been pulled forward, and a temporary drop in raw material prices further weighed on market transactions. As a result, stainless steel trading activity was sluggish during the week, with major mills maintaining a cautious outlook. This, coupled with tariff impacts, is likely to continue the negative feedback loop in the stainless steel sector, placing additional short-term pressure on high-NPI prices.

From a cost perspective, high-NPI production continues to operate at a loss based on ore prices from 25 days ago. Calculations using those prices indicate that cash costs for high-NPI smelters remain inverted. In terms of raw materials, auxiliary material prices remained stable this week. Recently, with improved downstream demand, hot metal output has started to rebound, lending support to the prices of coke and thermal coal. Accordingly, auxiliary material cost lines for high-NPI smelters also held steady. Regarding ore supply, the rainy season in the Philippines had largely ended 25 days ago, resulting in increased ore shipments. However, strong demand from Indonesia and low inventories at domestic smelters have supported stable ore prices. The continued cost-price inversion this week is mainly due to the persistently weak performance of high-NPI prices. Looking ahead to next week, auxiliary material prices are expected to remain stable with support from downstream demand. Nickel ore prices are likely to stay firm, supported by short-term demand growth. Losses for high-NPI smelters are expected to widen further.