[SMM Analysis] The Future of Indonesian Nickel Products in 2025

Nickel Ore
Indonesian Domestic Trade Laterite Nickel Ore Prices Remain Stable to Weak; Market Awaits Policy Signals
From market transactions: Entering the new year, some local mines in Indonesia need to address issues related to the MOMS system update; currently, no transaction information is available in the market. On the demand side, although local smelting enterprises in Indonesia hold raw material inventories sufficient for 1-2 months, pre-holiday restocking demand is expected to emerge.
From the price trend: In the first week of the new year, SMM's CIF and FOB prices for Indonesian laterite nickel ore remain temporarily stable. Negotiations between upstream and downstream parties are at a stalemate. The anticipated supply tightness due to policy impacts conflicts with the continued decline in high-grade NPI prices, creating an imbalance and spreading market caution. According to SMM, the impact of the MOMS system update is expected to be resolved within one to two weeks, and the market will continue to focus on changes in local policies in Indonesia.
In summary, going forward, Indonesian domestic trade ore prices and premiums are expected to decline due to the downward trend in high-grade NPI prices. However, policies still have significant room to influence nickel ore prices.

High-Grade NPI
Indonesian High-Grade NPI Prices Continue to Decline, Market Transactions Remain Sluggish
In December 2024, Indonesian NPI production increased by 7.33% MoM and 10.71% YoY. The cumulative YoY growth for 2024 was 7.3%. Following the addition of new RKABs for nickel ore in December, mines began to ramp up production, and nickel ore inventories at major smelters were relatively sufficient. On Obi Island, a new production line commenced operation in December, contributing to an increase in overall metal content on the island. In Morowali, December production saw a slight decline, while in Weda Bay, new production lines reached full production. Some high-grade nickel matte production lines switched to producing high-grade NPI, driven by stronger demand for high-grade NPI. This shift contributed to a significant production increase in Weda Bay in December. Overall, Indonesian high-grade NPI production in December showed a notable increase, with some newly commissioned production lines reaching or exceeding full production, continuing the trend of supply expansion.

In January 2025, it is expected that major smelters in key production areas will have more than two months of raw material inventory. Additionally, current demand for high-grade nickel matte remains weak, and profitability is poor, sustaining the drive to switch to high-grade NPI production. With the trend of switching to high-grade NPI unchanged, coupled with a slight production increase in the Morowali industrial park, in January, the overall Indonesian high-grade NPI production is expected to rise by 0.83% MoM and 17.79% YoY.

Refined Nickel
Indonesia's Refined Nickel Projects Continue to Ramp Up Production, with Additional Output Still Expected in 2025
In December 2024, Indonesia's refined nickel production was approximately 5,500 mt. PT Dingxing maintained continuous production throughout 2024, and PT Yongheng ramped up production since mid-year, currently achieving a monthly output of around 1,500 mt and still increasing.
Indonesia's refined nickel production is expected to continue increasing in 2025, with potential new projects coming online in the future.