【SMM Analysis】Weekly Review of Indonesian Nickel Market - 8.1

Nickel Ore

"Nickel Ore Prices Fluctuations; Pyrometallurgical Ore Market Hesitant, Hydrometallurgical Ore Remains Under Pressure"

Nickel ore prices in Indonesia slightly fluctuates this week. In terms of benchmark prices, Indonesia’s domestic trade benchmark for nickel ore are rising, reaching USD 15,208/dmt, a 0.69% increase. The mainstream premium for Indonesian laterite nickel ore 1.6% remained at $24–26/wmt. SMM's delivered price for 1.6% laterite nickel ore stood at $50.4–53.7/wmt, unchanged week-on-week. Meanwhile, SMM’s delivered price for 1.3% ore stood at $26–27.5/wmt, drop $0.3 compared to last week.

• Pyrometallurgical Ore:

On the supply side, the supply has seen some recovery as rainfall conditions have eased in parts of Sulawesi, although heavy rains continue in the Halmahera region, which still affects production. According to SMM, the current approved RKAB quotas are approximately 300–310 million tonnes, suggesting an increase in annual supply. On the demand side, the price of high-nickel pig iron in Indonesia has slightly rebounded, and some smelters have seen a slight recovery in margins compared to last week. However, many still face negative margins. Overall, the market remains cautious as smelters have not significantly increased their purchasing demand due to the current high ore costs, meaning pyrometallurgical ore prices still face downward pressure.

• Hydrometallurgical Ore:

From the supply side, there is a slight oversupply as most RKAB quotas have been approved, and some HPAL smelters now have abundant supply. On the demand side, Indonesian smelters’ demand has not shown significant growth this week, leading to a slight decline in hydrometallurgical ore prices. From a profit standpoint, price declines are unlikely to be steep, as miners are unable to bear substantial price cuts. Looking ahead, downstream smelter's demand remain relatively stable, and with most 2025 RKAB quotas gradually being approved, hydrometallurgical ore prices are expected to stay weak.

NPI

"High-Nickel Pig Iron Market Faces Gridlock Despite Rising Prices"

The average price of SMM 8–12% high-nickel pig iron (NPI) rose by RMB 5.2 per nickel unit from last week to RMB 906.2 per nickel unit (ex-factory, including tax). The indicative FOB price for Indonesian NPI also increased by USD 0.78 per nickel unit to USD 110.64. Following this price turning point, quotation activity and inquiries in the market have become more active. On the supply side, while Indonesian nickel ore price slightly eased, the decline was limited. Smelters' cost lines remained stable, and although cost inversion pressure slightly improved, it did not provide sufficient production incentives, with some producers still expecting low output. On the demand side, improving macro sentiment has supported stainless steel prices, thereby offering some price support to high-NPI. Market activity also picked up, with slightly improved transaction prices from traders. Overall, pessimism in the high-NPI market has somewhat eased, and prices are expected to gradually move upward.

The average discount of high-nickel pig iron relative to electrolytic nickel narrowed this week, with the weekly average discount at RMB 301.8/ton, down by RMB 25.4/ton from last week. Overall, high-NPI prices showed a slightly strong and volatile trend throughout the week, mainly driven by the cost inversion at smelters and improved expectations for stainless steel consumption. Market activity has modestly increased, and prices are expected to remain stable in the short term. However, under the fundamental logic of oversupply, nickel prices are projected to remain weak. Therefore, the discount of high-NPI relative to electrolytic nickel is expected to continue narrowing next week.