SMM, August 7th,
In July 2024, Indonesia's NPI production was 104,900 mt of nickel, down 12.1% YoY and 6.5% MoM. The cumulative production for 2024 has reached 795,300 mt of nickel, up 3.8% YoY. This production fluctuation was mainly affected by various supply and demand factors.
Supply side, although the RKAB approval quota for Indonesia's laterite nickel ore reached 240 million wmt in July, market demand for laterite nickel ore was still not effectively met. The tight supply and demand situation for laterite nickel ore in the Indonesian domestic market became more prominent, leading to high domestic trade prices. The average mainstream transaction premium broke through $15/wmt, directly raising the ROM cost for Indonesian NPI smelters. The persistently high prices in the domestic trade market further limited the production efficiency of NPI.
Demand side, downstream smelters' willingness to purchase laterite nickel ore continued to strengthen due to inventory factors. However, the grade of available nickel ore in the market showed a certain decline, forcing local Indonesian companies to source Philippine nickel ore as a supplement. This situation, coupled with the decline in laterite nickel ore shipping efficiency due to weather factors in July, jointly led to the reduction in Indonesia's NPI production in July.
Despite multiple challenges, Indonesia added some new production lines in July, bringing the possibility of subsequent capacity ramp-up. Meanwhile, the recent continuous rebound in NPI prices has started to show some production confidence in the NPI market. It is expected that Indonesia's NPI production will rebound in August, reaching 110,200 mt of nickel, up 5.05% MoM but slightly down 5.9% YoY. As the market supply and demand gradually adjust and new capacities are gradually released, Indonesia's NPI production is expected to further resume and increase in H2. However, the continuous fluctuation of material prices and weather factors still need close attention. Subsequent market rumours about whether there will be new RKAB quotas for domestic laterite nickel ore in Indonesia by the end of Q3 this year, the strength of the drive for Indonesian NPI to switch to nickel matte, and the frequent typhoon weather and rainy season in the Philippines, leading to a gradual narrowing of the laterite nickel ore supplement from the Philippines, are all potential factors that could impact the subsequent fluctuations in Indonesia's NPI production.
Overall, Indonesia's NPI market in 2024 has shown complex dynamic changes under the influence of various factors. As all parties gradually stabilize, Indonesia's NPI production is expected to achieve certain growth and recovery in the future.
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