【SMM Analysis】Weekly Review of Indonesian Nickel Market - Aug 15

Nickel Ore

"New RKAB Round in October? Flat Market of Nickel Ore Throughout the Week"

Nickel ore prices in Indonesia slightly declines this week. In terms of benchmark prices, Indonesia’s domestic trade benchmark price in the second period of August for nickel ore drop to USD 15,013/dmt, a 0.1% decrease. The mainstream premium for Indonesian laterite nickel ore 1.6% remained at $24–26/wmt. SMM's delivered price for 1.6% laterite nickel ore stood at $50.6–53.9/wmt, a USD0.2 increase compared to last week. Meanwhile, SMM’s delivered price for 1.3% ore stood at $25.5–27.5/wmt, decrease of USD0.3 on average compared to last week.

• Pyrometallurgical Ore:

On the supply side, in Sulawesi this week, the rainy season in most areas has largely come to and end, wth only occasional scattered rainfall, while some parts of Halmahera still experienced heavy rainfall. Overall, mining and transportation in certain regions of Indonesia have seen some improvement, which may lead to a rebound in nickel ore production and supply." On the demand side, Indonesian smelters’ profit margins have continued to improve slightly, but the situation of negative margins still exists.

Regarding quotas, Indonesia’s Ministry of Energy and Mineral Resources (ESDM) plans to issue official regulations in early September this year, shortening the RKAB quota period from three years to one year, and the new annual RKAB submission and approval process will begin in early October 2025. Currently, most of the supplementary RKAB quota approvals are nearly completed, with only about few nickel mining companies remaining. According to SMM research, the approved nickel ore RKAB quotas amount to approximately 300–310 million tons. This week, smelters’ procurement activities have not shown significant increases, as smelters and mining companies are still negotiating the next round of prices. Overall, with the rainy season improving in some parts of Indonesia and the progress of RKAB supplementary quotas, pyrometallurgical ore prices in Indonesia may remain under downward pressure.

• Hydrometallurgical Ore:

The hydrometallurgical ore market remained relatively stable this week, supported by ample supply, which led to a modest decline in prices. With the release of RKAB supplementary quotas, Indonesian supply of hydrometallurgical ore may increase further. On the demand side, HPAL smelters have yet to show significant growth in ore consumption, resulting in a short-term oversupply. Currently, smelters are maintaining roughly one month of inventory. As upcoming HPAL projects yet commissioned, short-term nickel ore procurement has not yet started, making it unlikely for prices to rise. Looking ahead, as this year’s RKAB quotas are progressively approved, hydrometallurgical ore prices are expected to remain weak.

NPI

"Cost Support Remains Strong, High-Nickel Pig Iron Prices Continue to Rise"

The SMM average price for 10–12% high-nickel pig iron rose by 5.8 CNY per nickel point last week, reaching 922.7 CNY/Ni point (ex-factory, tax included), while the Indonesian NPI FOB index increased by USD 0.86 per nickel point to 112.7 USD/Ni point. Early in the week, SHFE and stainless steel futures remained at elevated levels, with only a slight pullback toward the week’s end. With limited downside in nickel ore prices and continued rises in auxiliary material costs, cost support from high-nickel pig iron smelters remained strong. Market sentiment to hold prices was evident, as upstream enterprises remained cautious and a few high-priced fixed transactions took place.

On the supply side, upstream players maintained a hoarding mindset due to ongoing cost inversion, with the market primarily supplied by Indonesian material. On the demand side, rising stainless steel prices gradually restored market confidence, but peak-season consumption has yet to materialize, leaving end-user support limited. Overall, supported by costs, high-nickel pig iron prices continued their upward trajectory. However, due to insufficient end-user demand, mainstream downstream enterprises have begun negotiating prices. Looking ahead, high-nickel pig iron prices are expected to remain on an upward trend next week, though upside may be limited.

Based on nickel ore prices from 25 days ago used to calculate high-nickel pig iron cash costs, smelters’ profits continued to face cost inversion this week. On the raw material side, Philippine nickel ore prices remained stable with little expectation of further declines, while auxiliary material prices continued rising. Despite improvements in high-nickel pig iron prices, smelters still face cost pressure. Looking forward, auxiliary material prices are unlikely to fall, and nickel ore prices are expected to remain steady. With high-nickel pig iron prices expected to continue rising, smelter profits may see marginal improvement.