【SMM Analysis】Weekly Review of Indonesian Nickel Market - 5.23

Nickel Ore

Nickel Ore Prices Remain Stable This Week

According to data from SMM, prices of Indonesian nickel ore have remained generally stable this week. The mainstream premium for domestic trade laterite nickel ore in Indonesia held steady at USD 26–30/wmt. In terms of pyrometallurgical-grade ore, transaction prices continued to follow the adjustments made last week. SMM reports that the delivered price of 1.6% nickel content laterite ore for domestic trade in Indonesia remained in the range of USD 53.3–57.3/wmt. For hydrometallurgical-grade ore, the delivered price of 1.3% nickel content laterite ore remained unchanged from last week at USD 23–25/wmt.

Pyrometallurgical Ore

On the supply side of pyrometallurgical-grade ore, mining activities in Sulawesi continue to be impacted by rainfall. Meanwhile, the Halmahera region entered the rainy season in May, further disrupting mining and transportation activities across various regions in Indonesia, with some operations temporarily suspended. In addition, several Indonesian mines have yet to receive approval for their RKAB (Work Plan and Budget) quotas, further restricting transactions and tightening the supply situation. Although NPI (nickel pig iron) prices have shown a slight recovery this week, Indonesian smelters remain under pressure due to rising production costs, which limits their tolerance for further increases in ore prices. Market sources indicate that supplementary RKAB quotas are expected to begin the approval process in June or July; however, there remains uncertainty regarding the speed of these approvals.Overall, despite ongoing supply disruptions from the rainy season and the slow progress of RKAB quota approvals, subdued downstream demand is likely to cap any significant short-term upside for domestic trade pyrometallurgical-grade nickel ore prices in Indonesia.

Hydrometallurgical Ore

Supply side has not shown signs of significant tightening. On the demand side, a production accident in the MHP (Mixed Hydroxide Precipitate) project at the Morowali industrial park at the end of March led to reduced MHP output in April, and downstream industry's demand has yet to show a notable recovery in May. As a result, prices for hydrometallurgical-grade ore have shown a weakening trend overall.

Nevertheless, production lines in the Morowali park are expected to gradually resume operations throughout May. Once full production is restored, SMM anticipates that nickel ore prices may see upward momentum in the following period.

NPI

High-Nickel Pig Iron Prices Rebound, Short-Term Upward Momentum Expected

This week, high-nickel pig iron (NPI) prices stabilized and rebounded. On the supply side, Indonesian nickel ore remains in tight supply, with short-term premiums continuing to stay at elevated levels. Due to losses caused by declining finished product prices, some production lines may adjust their operating rates or shift to producing more high-grade nickel matte, potentially leading to a reduction in NPI output.

On the demand side, the stainless steel market performed relatively modestly this week. Social inventory levels declined only slightly, and spot price increases lacked momentum. Stainless steel producers are mainly purchasing raw materials on a just-in-time basis. Low-priced NPI supply in the market has become scarce, while the procurement prices offered by traders have increased significantly compared to previous periods. As a result, high-nickel pig iron prices are expected to maintain upward momentum in the short term, though the extent of the increase may be limited.

Based on nickel ore prices from 25 days ago, current cash costs for high-nickel pig iron production indicate that the cost inversion at smelters narrowed during the week. On the raw material side, prices for auxiliary materials showed weak fluctuations this week. With downstream steel mills maintaining high coke inventories, they have been pushing down procurement prices, leading to a slight decline in coke prices. Meanwhile, increased coking coal supply has also put pressure on its prices. As a result, the auxiliary material cost line for smelters has moved further downward. Looking ahead to next week, auxiliary material prices are expected to remain weak, and the smelters’ cost line for auxiliary inputs may continue to decline. For nickel ore, policies in Indonesia are expected to support further price increases for Philippine nickel ore. Although smelters are likely to remain in a cost-inverted position next week, the degree of inversion is expected to narrow further.