Feedback from Local Indonesian Companies after The Anti-corruption Policy

So what is the feedback from local Indonesian companies on this matter?

According to SMM, the recent high grade nickel ore market price in Indonesia is higher.

Smaller nickel smelters without a stable source of ore supply are facing greater pressure to purchase raw materials.

Large nickel smelters due to lower marginal cost, the theoretical acceptable price of nickel ore is higher than small smelters, so to MHP more than 15 U.S. dollars high premium to buy nickel ore. And according to market understanding, some smelters also purchase small amount of nickel ore from the Philippines at a price much higher than the benchmark price of domestic trade.

Although the competitive pressure of low-grade nickel ore is less than that of high-grade ore, it is also facing different degrees of price increases, by about 5-8 USD/wet ton. The supply and demand imbalance concerns continue to push up the price of nickel ore, nickel supply over-concentration concerns have emerged.

So how long can Indonesia's nickel ore last?

Over the past few years, the government has introduced many measures, such as prohibiting the export of nickel ore,
repeatedly reaffirming the imposition of export tariffs on low-grade nickel products, and prohibiting pyro-process enterprises from investing in new capacity.

It is obvious that the government strategic goals are mainly in two directions：

First, Extend the life cycle of nickel ore and accelerate the in-depth layout of downstream industries;

The second one is the layout of the new energy battery material industry chain is more important than the layout of the NPI stainless steel industry. However, the current consumption of nickel ore in Indonesia far exceeds the quota issued by the government.

The demand for nickel ore in Indonesia has grown rapidly in recent years, especially high grade ore. The assumption of the forecast is the government do not restrict the nickel ore. According to the forecast of SMM, The accumulated consumption of nickel ore from 2023-2026 is 10.5 million metal tons. According to USGS, Indonesia's estimated nickel reserves for 2022 are 21 million metal tons. Which means nickel ore resources will be available for less than 10 years. It should be noted that at present, the main downstream products need high-grade nickel ore, and high-grade nickel ore resources only account for 30%-40%, and high-grade nickel ore is especially in short supply.

Written by Nickel Research, if you have any questions about the nickel market, please don't hesiatte to talk with me Fancyli@smm.cn