【SMM Analysis】Weekly Review of Indonesian Nickel Market - Aug 22

Nickel Ore

This week, Indonesian nickel ore prices showed a slight decline. On the benchmark front, the domestic nickel ore reference price edged down to USD 15,013/dry metric ton, a decrease of 0.1%. For premiums, the mainstream premium for domestic laterite nickel ore remained at USD 24–26/wet metric ton. The SMM domestic laterite nickel ore 1.6% delivered to works price ranged from USD 50.5–53.8/wet ton, down USD 0.1 from last week, a drop of 0.2%. For lower-grade ores, the SMM domestic laterite nickel ore 1.3% delivered to works price remained stable at USD 25.5–27.5/wet ton, unchanged from last week.

• Pyrometallurgical Ore:

This week, parts of Sulawesi experienced unpredictable rainy weather, slightly worse than last week, while the rainy season remained evident in parts of Halmahera. Overall, Indonesian mining activity showed no significant change compared with last week. Regarding quotas, RKAB approvals continued to progress slowly, with most mines receiving only minor supplementary quotas in August, keeping overall nickel ore supply relatively abundant. On the demand side, from January to July 2025, Indonesian nickel ore production reached 131 million tons, up roughly 11.2 million tons compared to the first half of the year. However, due to ongoing losses at some smelters, downstream demand has not yet recovered significantly, and nickel ore procurement remained at last week’s levels. Overall, given the slow recovery in smelter demand, the release of additional RKAB quotas, and abundant ore supply, Indonesian ferro-nickel ore may face downward pressure.

• Hydrometallurgical Ore:

Market transactions remain subdued, with no significant buying activity. The release of supplementary RKAB quotas has increased the supply of hydrometallurgical ores. On the demand side, ore shipments from other islands decreased this week, indicating that domestic island ore supply is relatively sufficient. For upcoming HPAL projects in Indonesia, short-term nickel ore procurement has not yet started, providing no support for price increases. Looking ahead, with most RKAB supplementary quotas approved this year, hydrometallurgical ore prices are expected to remain weak.

NPI

"Firm Costs but Weak Fundamentals Limit High-Nickel Pig Iron Price Gains"

The average price of SMM 10–12% high-nickel pig iron (NPI) rose by 4.8 RMB per nickel unit from last week to 927.5 RMB per nickel unit (ex-factory China, tax included), while the Indonesian NPI FOB index increased by 0.5 USD per nickel unit to 113.2 USD per nickel unit. Supported by costs, high-nickel pig iron prices maintained an upward trend this week; however, end-user consumption remained below expectations, weakening fundamental support and slowing the price increase.

From the supply side, nickel ore prices remained stable this week, while auxiliary material costs continued to rise. The firm cost line of smelters provided a bottom support for high-nickel pig iron prices. At the same time, supply of 8–10% grade high-nickel pig iron was relatively tight, leading to a price premium for this grade under market adjustments. On the demand side, stainless steel futures declined, weakening market sentiment. Meanwhile, downstream inventory turnover days remained long, and with slow inventory digestion and underwhelming peak-season performance, stainless steel mill purchasing sentiment was restrained, further limiting the upside for high-nickel pig iron prices. Overall, cost support continues to push prices upward, but weak end-user consumption and fragile fundamentals suggest limited price gains next week.

Based on nickel ore prices from 25 days ago, cash costs for high-nickel pig iron indicate that smelter profits remain in a deficit this week. On the raw material side, Philippine nickel ore prices remained stable with little room for decline, and Indonesian nickel ore has limited downward potential. Auxiliary material costs continue to rise, keeping smelter cost lines firm. Looking ahead to next week, auxiliary material prices are unlikely to fall, and nickel ore prices are expected to remain stable, suggesting that smelter cost lines will remain firm. Given the limited expected price increase for high-nickel pig iron, smelter profits are unlikely to recover.