【SMM Analysis】Weekly Review of Indonesian Nickel Market - 5.30

Nickel Ore

"Steady for Now: Is the Nickel Ore Market Poised for a Turn?"

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

From the supply perspective, 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

Pre-Holiday Market Sees Light Buying; Short-Term Prices Remain Stable

This week, high-grade ferronickel (NPI) prices saw a slight upward movement.

On the supply side, in Indonesia, premiums for domestic pyrometallurgical nickel ore remain relatively firm. As a result, smelters are generally operating under negative profit margins, with some high-cost producers reducing production loads, leading to a potential slight decline in overall output. On the demand side, ahead of the Dragon Boat Festival, the stainless steel market did not experience concentrated restocking activity. Social inventories of stainless steel increased, and major steel mills showed limited interest in one-price raw material purchases, while traders recorded some average-price transactions.

In the short term, the easing of Trump-era tariffs has not yet spurred a rebound in terminal stainless steel demand. The continued weakness in stainless steel prices may exert pressure on raw materials. However, supported by firm cost levels, high-grade ferronickel prices are expected to remain stable.

Based on nickel ore prices from 25 days ago, current cash cost estimates indicate that high-grade ferronickel smelters are still operating at a loss. On the raw materials side, auxiliary material prices continued to trend weak this week. Steel mills are maintaining high inventories of coking coal and coke. As hot metal output begins to decline, steelmakers are showing a stronger inclination to push coke prices down. This, combined with continued weakness in coke and coking coal futures, has led to a loosening of auxiliary material cost lines for smelters. From the ore side, driven by strong demand in Indonesia, Philippine nickel ore prices remain firm to slightly stronger. The narrowing of smelter losses this week is mainly due to the decline in auxiliary material costs and a mild increase in product prices.

Looking ahead to next week, auxiliary material prices may continue to weaken, further pushing down smelter cost lines. Meanwhile, nickel ore prices are likely to remain firm in the face of short-term increases in downstream demand. As a result, smelter losses are expected to narrow further.