【SMM Analysis】Weekly Review of Indonesian Nickel Market - 6.13

Nickel Ore

"Hydrometallurgical Ore Prices Surge Again, Signaling Renewed Market Tension"

This week, the mainstream premium for Indonesian domestic laterite nickel ore remained stable at USD 26–28/wet ton. For pyrometallurgical ore, SMM reported that the delivered price for 1.6% nickel laterite ore was USD 54.3–57.3/wet ton, unchanged from last week. As for hydrometallurgical ore, the delivered price for 1.3% nickel laterite ore increased to USD 26–28/wet ton, a rise of USD 1/wet ton week-on-week, representing a 3.8% increase.

• Pyrometallurgical Ore

On the supply side, the rainy season continues to be the primary factor causing the undersupply of saprolite ore, adversely affecting both production and transportation. According to multiple Indonesian mining companies, persistent heavy rainfall has severely disrupted operations, leading to ongoing tightness in ore supply. Additionally, some mining companies have yet to receive approval for their supplementary RKAB (Work Plan and Budget) quotas, further restricting nickel ore sales in the market.

On the demand side, according to SMM’s Inventory Cycle Index for Indonesian pyrometallurgical ore, the average inventory at pyrometallurgical smelters rose in May compared to April, reaching an average of 2.2 months. As a result, purchasing sentiment in the market has weakened. Moreover, Indonesian NPI smelters are still facing a cost inversion situation, limiting their ability to absorb further increases in ore prices. Therefore, the price upside for nickel ore in June is expected to be limited.

• Hydrometallurgical Ore

On the supply side, hydrometallurgical ore supply has remained stable in the short term. However, the upcoming rainy season in the Halmahera region may impact shipments of low-grade laterite nickel ore.

On the demand side, the Morowali Industrial Park, which had previously suspended operations due to an incident, has now largely resumed production. Strengthened demand has driven this week’s increase in hydrometallurgical ore prices. Looking ahead, with two large-capacity hydrometallurgical ore projects expected to be commissioned in the second half of the year, demand for hydrometallurgical ore is anticipated to rise further. In addition, ongoing cross-island procurement demand may further intensify upward pressure on ore prices. Overall, Indonesian hydrometallurgical ore prices are likely to remain strong.

NPI

"Stainless Steel Market Faces Intensified Negative Feedback; Raw Material Prices Continue to Decline"

This week, the supply side of high-nickel pig iron (NPI) market continues to weaken due to mounting cost pressures and a volatile stainless steel market. While Indonesian pyrometallurgical nickel ore premiums remain firm, smelters are burdened with high production costs and falling finished product prices, leading to widespread losses. Some high-cost production lines may reduce output, although high-nickel pig iron remains the primary product due to limited alternatives. On the demand side, stainless steel prices have dropped to multi-year lows amid aggressive sales strategies by major producers, prompting steel mills to reduce raw material purchases and further depressing raw material prices.

Meanwhile, smelter cost inversions have worsened due to firm nickel ore prices and weak auxiliary material costs. Coke and coking coal prices remain soft, lowering auxiliary cost baselines. However, strong Indonesian demand for Philippine nickel ore and ongoing supply constraints—exacerbated by weather issues—have kept nickel ore prices elevated. This imbalance between raw material costs and declining finished product prices is deepening financial strain on smelters. Unless finished product prices stabilize, cost inversions are expected to persist or worsen in the near term.