Indonesia’s Planned Commodity Exchange: Potential Shift Toward Domestic Nickel Price Discovery

Background: Indonesia Plans New Mineral and Strategic Commodities Exchange

Indonesia is preparing to establish a new exchange for minerals and strategic commodities, targeted to begin operations on January 1, 2027. The initiative aims to strengthen Indonesia’s role in commodity price formation, improve transaction transparency and establish domestic reference prices.

In his August 14 speech to the DPR RI, President Prabowo Subianto said Indonesia should have greater control over the prices of its natural resources, specifically citing nickel, tin, gold, coal, gas, oil and coffee. He emphasized Indonesia’s ambition to move beyond being a commodity producer and exporter toward becoming a price setter.

The exchange is expected to operate under OJK supervision, with detailed regulations targeted for September 17, 2026. Nickel, tin and gold have been identified as potential commodities, although the final product coverage and trading framework have yet to be confirmed.

Why It Matters for Nickel

The planned exchange forms part of Indonesia’s broader effort to strengthen control over strategic commodities through downstreaming, export governance and production management. It could potentially provide:

• A centralized platform for price discovery;

• Greater transaction transparency;

• Standardized domestic reference prices;

• Better government access to transaction data; and

• Greater influence over regional commodity pricing.

For nickel, the key issue is whether the exchange can eventually establish a credible Indonesian benchmark for physical transactions, potentially complementing rather than immediately replacing international benchmarks such as the LME.

Nickel Product Scope Remains Unclear

Although nickel has been identified as a potential strategic commodity, the government has not confirmed which nickel products will be traded. Potential products include:

• Nickel metal;

• Ferronickel;

• NPI;

• Nickel intermediates; and

• Nickel ore.

For the Indonesian ore market, the most important question is whether saprolite and limonite will eventually receive standardized exchange-based pricing. There is currently no confirmed requirement for nickel ore transactions to be conducted through the exchange. Contract specifications, delivery locations, quality parameters and settlement mechanisms also remain undisclosed.

Key Issues to Monitor

1. Nickel coverage: Whether nickel is formally included and which products qualify.

2. Ore inclusion: Whether saprolite and limonite will receive exchange-based pricing.

3. Trading mechanism: Whether the exchange uses spot, futures or other standardized contracts.

4. Benchmark methodology: Whether prices are derived from sufficient physical transactions to be representative.

5. Liquidity and participation: Whether miners, smelters, traders and buyers actively use the platform.

6. Relationship with LME: Whether the Indonesian benchmark develops as a complementary regional physical reference.

7. Government influence: Whether the exchange primarily serves independent price discovery or broader commodity-management objectives.

8. Launch readiness: Whether regulations, infrastructure and liquidity can be established before January 1, 2027.

Potential Impact on Nickel Ore Pricing

If nickel ore is eventually included, the exchange could gradually shift Indonesian ore pricing from predominantly negotiated transactions toward a benchmark-based pricing system.

Such a benchmark could incorporate factors already influencing Indonesian ore prices, including nickel grade, HMA, smelter demand, ore availability, mining costs, freight and RKAB availability.

For saprolite, standardized pricing could improve transparency for RKEF/NPI feedstock. For limonite, an exchange reference could become increasingly relevant as HPAL capacity expands.

However, the exchange’s influence will ultimately depend on liquidity, price transparency and broad adoption. In the near term, negotiated prices and existing benchmarks are therefore likely to remain dominant.

SMM View

SMM views the planned exchange as a structural development rather than an immediate change to nickel supply-demand fundamentals. Its short-term impact on Indonesian nickel ore prices should remain limited, as the trading rules, product specifications and participation requirements have yet to be confirmed.

In the longer term, successful inclusion of nickel ore or nickel products could strengthen Indonesia’s influence over regional price discovery:

Domestic Exchange → Indonesian Benchmark → Regional Physical Reference → Greater Pricing Influence

The key developments to monitor are the September 17 regulations, final nickel coverage, physical ore inclusion, contract specifications, participation requirements, benchmark methodology and liquidity ahead of the planned January 1, 2027 launch.