【SMM Analysis】Weekly Review of Indonesian Nickel Market - 7.4

Nickel Ore

"Indonesian Benchmark Price for Nickel Ore Dropped, Downtrend Confirmed?"

This week, Indonesia's domestic nickel ore prices have seen a decline. The premium for Indonesian laterite nickel ore has remained stable at USD 24-26 per wet metric ton. The HMA benchmark price for the first half of July recorded a slight decline to RMB 14,943/ton, representing a 1.83% decrease compared to the previous period. According to SMM, the delivered price of 1.6% Ni content laterite ore now stands at USD 50.4-54.4/wmt, down USD 0.5 from last week, a decline of 0.9%. For hydrometallurgical-grade ore, the price for 1.3% Ni content remained stable at USD 26-28/wet ton, unchanged from previous week.

• Pyrometallurgical Ore:

From the supply side, frequent rainfall continues to disrupt mining and logistics in key production areas like Sulawesi and Halmahera. However, progress has been made in the approval of some new and revised RKAB quotas. Approvals are expected to continue advancing throughout July and August, which may further increase future nickel ore supply. In terms of demand, most Indonesian NPI smelters are still struggling to cope with the high prices of nickel ore. Some smelters are operating under cost inversion, and even facing production cuts, resulting in reduced procurement demand. Overall, despite continued supply tightness caused by the rainy season, the downward pressure from NPI smelters has made it difficult for prices to maintain high levels. Looking ahead, pyrometallurgical ore prices are expected to remain under pressure.

• Hydrometallurgical Ore:

In terms of supply, current supply of HPAL-grade ore in Sulawesi remains relatively stable, adequately meeting the present market demand. In addition, significant progress in RKAB approvals is expected over the coming months, which may further boost supply volumes. On the demand side, MHP project operations are running normally, with steady demand for HPAL ore. Looking forward, as supplementary RKAB quota approvals progress further, hydrometallurgical ore prices are also expected to trend weakly.

NPI

Downstream Demand Remains Weak with Limited Improvement; Short-Term Prices May Stabilize at Low Levels

High-grade nickel pig iron (NPI) prices continued to weaken this week, with SMM’s average price falling to RMB 909.8 per nickel unit, down RMB 5.4 from the previous week. The Indonesian NPI FOB index also declined slightly to USD 110.9 per nickel unit. On the supply side, Indonesian smelters remain under cost pressure, with some facilities entering maintenance and others shifting production to high-grade nickel matte. These factors are likely to reduce overall NPI output in the near term.

On the demand side, stainless steel futures saw an uptick, slightly lifting spot prices, but overall destocking progress was limited. As a result, stainless steel producers maintained a weak demand for raw material procurement. Although some traders showed restocking interest, limited spot availability from upstream smelters led to a modest increase in transaction prices. Overall, high-grade NPI prices are expected to remain weak and stable in the short term.

Based on nickel ore costs from 25 days ago, smelter losses have deepened further due to falling NPI prices. Auxiliary material costs stabilized this week, supported by improved macro sentiment and a rebound in ferrous product prices. Meanwhile, Philippine nickel ore prices remained firm on stronger Indonesian demand, though this strength may soften next week as downstream smelters face deep cost inversion. With auxiliary costs likely to stay flat and ore prices potentially easing, smelter losses may begin to narrow slightly in the coming week.