【SMM Analysis】Weekly Review of Indonesian Nickel Market - 7.11

Nickel Ore

"Indonesian RKAB Quota 364 million tons? Prices Going Down?"

The price of Indonesian nickel ore dropped again this week. In terms of premiums, the mainstream premium for domestic Indonesian laterite nickel ore remained stable at USD 24-26 per wet ton this week. The SMM-delivered price for domestic Indonesian laterite nickel ore (1.6%) was USD 50.4-53.9 per wet ton, down USD 0.25 from last week, a decline of 0.5%. For hydrometallurgical ore, the SMM-delivered price for domestic Indonesian laterite nickel ore (1.3%) held steady at USD 26-28 per wet ton, unchanged from last week.

• Pyrometallurgical Ore:

In terms of the supply, Meidy Katrin Lengkey, Secretary-General of APNI (the Indonesian Nickel Association), revealed in an interview with CNBC Indonesia that the approved RKAB (Work Plan and Budget) quota for nickel ore in 2025 is as high as 364 million tons, while actual production is only 120 million tons. On the demand side, downstream smelters remain in a loss-making phase, with weak production incentives and low output. Overall, although the supply of Indonesian nickel ore remains tight due to the rainy season, with the subsequent approval of supplementary RKAB quotas and considering downstream cost inversions, the acceptance of high-priced nickel ore is limited. Going forward, pyrometallurgical ore prices are expected to remain weak.

• Hydrometallurgical Ore:

On the supply side, current supply remains relatively stable, meeting market demand. Additionally, progress in the approval of supplementary RKAB quotas may further increase supply. On the demand side, MHP projects are operating normally, with some MHP producers increasing output, leading to overall steady or slightly rising demand. In the long term, with the progress of supplementary RKAB quota approvals, hydrometallurgical ore prices are expected to face downward pressure.

NPI

Oversupply Situation Remains Unchanged, Short-Term Prices Still Under Pressure

During the week, the average price of SMM 8–12% high-grade ferronickel was 905.3 yuan/nickel point (ex-works, including tax), down 4.5 yuan/nickel point from the previous week. The FOB Indonesia NPI index price was $110.4 USD/nickel point, a decrease of $0.5 USD/nickel point from last week. Prices of high-grade ferronickel continued their weak trend during the week, though the rate of decline has started to narrow. On the supply side, in Indonesia, the domestic premium for pyrometallurgical ore has weakened, yet most smelters remain unprofitable. Some smelters have reduced their production loads, and certain convertible production lines have begun producing high-grade nickel matte, which may lead to a potential decline in Indonesian NPI output. On the demand side, stainless steel prices stabilized this week, and futures saw a decent rebound. However, due to spot prices remaining at low levels, stainless steel mills mainly purchased based on immediate demand, with procurement prices falling compared to the previous period. In summary, the upward momentum of stainless steel prices remains weak. With raw material prices under pressure, high-grade ferronickel prices are expected to remain weak and stable in the short term.

According to the nickel ore price levels from 25 days ago used to calculate the cash cost of producing high-grade ferronickel, smelters’ cost inversion deepened this week. Additionally, prices of auxiliary materials stabilized at the bottom, and under the influence of improved macro sentiment, ferrous products began a price rebound after a prolonged period of weakness. As a result, the cost line for smelters’ auxiliary materials remained slightly firm. Looking ahead to next week: auxiliary material prices are expected to continue recovering under “anti-involution” policy interventions. As for nickel ore, the smelters’ ore cost line may shift downward slightly in response to softening ore prices. Overall, smelter losses may ease slightly next week.