【SMM Analysis】Weekly Review of Indonesian Nickel Market - Oct 17

Nickel Ore

In early October, Indonesian nickel ore prices showed an upward trend. In terms of benchmark prices, Indonesia’s domestic nickel ore benchmark for the second half of October was USD 15,142 per dry metric ton, up 0.27% from the previous period. For premiums, according to SMM data on Indonesia’s domestic laterite nickel ore premiums, 1.4% grade averaged USD 22, 1.5% grade averaged USD 25.5, and 1.6% grade averaged USD 26. The delivered price for 1.6% Ni laterite ore in Indonesia was USD 51.7–53.7 per wet metric ton, increase $0.1/wmt. For hydrometallurgical ore, the delivered price for 1.3% Ni remained stable at USD 24–26 per wet metric ton, unchanged from last week.

• Pyrometallurgical Ore:

From the supply side, most areas in Sulawesi and Halmahera are entering the dry season, which is expected to support higher ore production. The rainy season in Sulawesi and Halmahera has largely ended, and overall mining operations are unimpeded. From the mine perspective, nickel ore production is expected to see a slight increase by the end of this year, as mines plan to fully utilize their approved production quotas.

On the demand side, due to anticipated increases in NPI production, most Indonesian smelters have recently ramped up ore procurement. From the RKAB (mining permit) perspective, the new regulation adjusting the approval cycle from three years to one year has also intensified market expectations of a "tight ore supply" in the future. Although previously approved 2026 RKABs remain valid until the first quarter of 2026. Looking ahead, pyrometallurgical nickel ore prices are expected to maintain an upward trend.

• Hydrometallurgical Ore:

From the limonite ore perspective, the Indonesian market remains relatively subdued, as smelter demand for MHP (mixed hydroxide precipitate) production has not shown significant growth. Concurrently, cross-island ore shipments have slightly declined. However, limonite ore supply is expected to strengthen in the future, driven by increased downstream demand, primarily due to two factors: anticipated procurement activities toward the end of the fourth quarter based on expectations of the new RKAB policy, and early stockpiling for next year's high-pressure acid leaching (HPAL) projects. Overall, limonite ore prices are expected to remain stable in the short term, with limited upside potential.

Nickel Pig Iron

“High Nickel Pig Iron Prices Continue to Decline, Expected to Face Further Pressure”

The average price of SMM 10–12% high-grade nickel pig iron (NPI) fell by RMB10 per nickel unit from last week to 943.5 yuan per nickel point (ex-works, including tax). The average price of Indonesian NPI on an FOB basis declined by 1.14 USD per nickel unit from last week to 116.02 USD per nickel unit. Following the downward adjustment in tender prices by major steel mills, most downstream stainless steel producers have been pushing for lower prices. Coupled with consecutive declines in stainless steel futures, the economic advantage of scrap stainless steel has improved, squeezing demand for high nickel pig iron. As a result, high NPI prices saw a significant decline this week. On the supply side, despite rising ore prices keeping the cost line for high nickel pig iron firm, current prices are already approaching the full production cost of Indonesian high nickel pig iron. However, due to weak end-demand, smelters' quoted prices continue to decline. On the demand side, falling stainless steel futures have put pressure on downstream profit margins, leading to noticeable declines in recent quotations and some transaction prices. Overall, while production costs for high nickel pig iron remain supported by ore prices, persistent weak end-consumer demand is expected to keep prices under pressure throughout the month.

Calculated based on nickel ore prices from 25 days ago, smelter profits for high nickel pig iron declined this week. On the raw material front, Philippine nickel ore prices are expected to rise, while Indonesian nickel ore prices also increased week-on-week. Auxiliary material prices have risen again, driving up the cost of high nickel pig iron. At the same time, the continuous decline in high nickel pig iron prices has further compressed smelter profits. Looking ahead to next week, with auxiliary material prices rising again and Philippine nickel ore prices likely to increase, high nickel pig iron prices are expected to continue falling, putting further pressure on smelter profitability.