Indonesia issued benchmark nickel ore prices for February

SHANGHAI, Feb 18 (SMM) – Indonesia’s energy authorities have issued benchmark nickel ore prices for February, which are higher than market prices, in an attempt to push domestic prices of nickel ore higher and reallocate profits across the industry after it banned exports of such material from the start of this year.

The Ministry of Energy and Mineral Resources set the benchmark price for Ni 1.7% nickel ore at $28.37/wmt FOB, Ni 1.8% at $30.04/wmt FOB, Ni 1.9% at $31.71/wmt FOB.

Nickel ore pricing in Indonesia’s domestic market has been dominated by the smelting side. According to a Reuters report in November, the Indonesian nickel miners association (APNI) claimed that two giant smelters control 60% of the local nickel ore market and determine prices in Indonesia.

Indonesia’s domestic prices for nickel ore with 1.7% Ni content were about $20/wmt, below the average $30/wmt government-set benchmark price for 2019, and much lower than overseas prices. In the top buyer China, mainstream quotes for Indonesian nickel ore with 1.65% Ni content were about $61/wmt at the end of 2019.

Concerns over low profitability of mines in Indonesia loomed large after the export ban came into force in January.

Prices of nickel ore in Indonesia look set to rise, as nickel ore is not renewable and as smelters now have decent profit margins, but the prices are unlikely to be pegged at a single rate across the nation, as most mines in the country are private and the quality of ores from different mines are discrepant.

Chinese investors are dominant players in Indonesia’s nickel smelting sector.

Note: Nickel ore benchmark prices set by the Indonesian government are for the local market. The FOB prices refer to ex-works prices from local mines.