【SMM Analysis】Weekly Review of Indonesian Nickel Market - Aug 29

Nickel Ore

Indonesian nickel ore prices remained stable this week. For the second period of August, domestic benchmark price of Indonesian nickel ore is USD 15,013/dry metric ton. For premiums, according to SMM data on Indonesian domestic laterite nickel ore, 1.4% grade averaged USD 22.2, 1.5% grade averaged USD25.2, and 1.6% grade averaged USD25.7. This wekk, SMM domestic laterite nickel ore 1.6% delivered to works price ranged from USD 50.5–53.8/wet ton, unchanged from last week. 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:

On the supply side, at the end of August, the rainy season in Halmahera remained strong, while weather conditions in Sulawesi showed some improvement in the following week. Overall, the impact on nickel ore shipments was less severe than before. This month, a slight oversupply of barges led to a small decline in freight rates. Regarding RKAB quotas, new regulations with a one-year validity will take effect in September, allowing companies to re-submit quota applications for 2026. The current quota revision of IUP is nearing completion, and ore supply in the market remains abundant. In terms of demand, this week, Indonesian smelters did not face any shortage of raw material supply. Although nickel ore prices have shown some improvement, smelters overall continue to operate at a loss. With improving weather conditions and the 2025 quota approval process close to completion, Indonesian pyrometallurgical nickel ore prices remain under downward pressure.

• Hydrometallurgical Ore:

Supply is relatively ample, with slightly better limonite mining conditions in Sulawesi this season. In addition, ongoing RKAB approvals are expected to further increase market supply. On the demand side, inter-island transportation of limonite declined, and hydrometallurgical smelters did not significantly increase procurement rate this week. According to SMM’s Indonesian Hydrometallurgical Ore Inventory Cycle Index, the average inventory at hydrometallurgical smelters in August increased compared with July, reaching 1.6 months. Looking ahead to the end of the third quarter, hydrometallurgical nickel ore prices are expected to remain under pressure, with further downside potential.

NPI

“Demand Recovery Under Cost Support, High-Nickel Pig Iron Prices Edge Higher”

High-nickel pig iron (NPI) prices edged higher this week on the back of firm cost support and signs of demand recovery. The average price of SMM 10–12% NPI (ex-works, including tax) rose 9.6 yuan/Ni unit to 937.1 yuan/Ni unit, while the Indonesian NPI FOB index increased USD 1.64/Ni unit to USD 114.84/Ni unit. Multiple stainless steel mills and upstream players launched tenders, significantly boosting trading activity. Stainless steel inventories continued to decline, suggesting gradual consumption recovery and reinforcing market confidence.

Based on nickel ore prices 25 days ago, NPI smelters continued to face negative cash margins this week. On the supply side, rising auxiliary material and electricity costs kept production cost lines elevated, providing strong price support. Although this week’s NPI rally improved margins slightly, smelters still face negative cash margins due to high raw material and energy costs. Philippine ore prices stayed stable, while Indonesian ore saw only a minor drop. Looking to next week, with costs unlikely to ease and NPI price gains limited, smelters are expected to remain under margin pressure despite continued support from downstream demand recovery.