Nornickel Cuts 2026 Nickel Surplus Forecast as Indonesia Supply Tightens

Nornickel Nickel

Nornickel nickel surplus forecast for 2026 has been cut sharply to around 20,000t from a previous estimate of 240,000t as Indonesian ore constraints and higher processing costs tighten global supply.

Nornickel nickel surplus forecast now points to a market much closer to balance after a substantial 278,000t surplus in 2025. Global nickel supply is expected to fall by 5% to 3.71mn t this year, marking the first annual decline in a decade.

Nornickel nickel surplus forecast also reflects weaker Indonesian NPI and mixed hydroxide precipitate production, higher ore prices and severe sulphur cost inflation affecting HPAL operations.

Global demand is expected to increase by 2% to 3.69mn t, meaning relatively modest demand growth could now have a greater effect on pricing as supply expansion slows.

Indonesia Ore and Sulphur Constraints Cut Nickel Supply Growth

Indonesia remains the decisive variable for the global nickel market. The country mined around 320mn t of ore in 2025 against approved RKAB quotas of 379mn t, showing that formal quotas do not necessarily translate into actual production.

Expected 2026 quotas are around 300mn t. With utilisation estimated near 90%, actual mining could be closer to 270mn t.

Lower ore grades are further reducing contained nickel availability. This means the effective supply constraint is greater than headline ore tonnage alone suggests.

Indonesian NPI production fell by 8% year on year during January-May. Nornickel expects full-year NPI output to decline by 11%, while MHP production could fall by 9%.

Indonesia's revised ore pricing formula is adding another cost pressure. Depending on grade, minimum ore prices have doubled or tripled and could increase Class 1 nickel production costs by as much as $5,000/t on a cathode-equivalent basis.

HPAL producers face an additional problem from sulphur. Prices have increased from around $300/t to more than $1,000/t following Middle East supply disruption.

HPAL production typically requires around 10-11t of sulphur for each tonne of nickel produced. Indonesia sourced more than 75% of its sulphur imports from the Middle East in 2025, making the sector particularly exposed to disruption.

Around one-third of HPAL capacity is currently idle, while HPAL production fell by 20% year on year in May.

These constraints are changing the economics of Indonesian nickel after years of rapid capacity expansion.

Demand Growth Remains Modest but Market Cushion Shrinks

Nickel demand remains relatively subdued, particularly in stainless steel, but slower supply growth means the market requires less demand growth to tighten.

Nornickel expects stainless steel nickel consumption to increase by only 1% in 2026.

Chinese stainless producers are increasing scrap use, reducing their need for primary nickel. Average stainless scrap content is expected to rise to 24% this year from 19% in 2025.

This shift should keep Chinese primary nickel demand for stainless steel broadly flat at around 1.6mn t.

However, the growing share of 316 stainless steel provides some support because it contains more nickel than conventional 304 grades.

Battery demand is also expanding. China's nickel sulphate production is forecast to rise by 15% to 421,000t of contained nickel this year and reach 455,000t in 2027.

Indonesian nickel sulphate production is expected to increase by 18% to 59,000t, while Indonesian matte output could surge by 48% as economics improve for converting NPI into matte.

Nornickel expects the surplus to increase slightly to around 55,000t in 2027 if Indonesian ore quotas rise, sulphur availability improves and new capacity ramps successfully.

The market is therefore not structurally short, but the scale of oversupply has narrowed dramatically.

The Metalnomist Commentary

Nickel's long-running oversupply story is becoming less certain as Indonesia moves from unconstrained expansion toward tighter ore and processing economics. The critical variable is now whether Indonesian supply can recover faster than battery and stainless demand grows.

 

Tianhao Magnesium Alloy Plant Targets NEV and Aerospace Lightweighting Demand

Huizhou Tianhao New Material Technology

Tianhao magnesium alloy plant development has started in Huizhou, Guangdong province, as Chinese manufacturers expand capacity for lightweight materials used in new energy vehicles, electronics and aerospace.

Tianhao magnesium alloy plant is designed to produce 20mn units/yr of magnesium alloy profiles. The company has not disclosed a start-up timeline, but construction began on 4 June.

Tianhao magnesium alloy plant development reflects rising demand for lightweight structural materials across NEVs, consumer electronics, low-altitude aviation and aerospace. Magnesium's low density gives it an advantage where reducing component weight can improve energy efficiency and vehicle performance.

China already dominates global magnesium production and processing, giving domestic manufacturers strong access to metal feedstock and downstream fabrication capabilities.

Lightweighting Drives Magnesium Alloy Demand

Magnesium alloys are increasingly used where manufacturers need lower weight without abandoning metallic structural materials. This is especially relevant to electric vehicles, where reducing vehicle mass can improve driving range and offset battery weight.

Consumer electronics provide another important demand segment. Magnesium alloys can be used in lightweight housings and structural components that require stiffness and dimensional stability.

The low-altitude economy could become a larger growth market. Drones, electric vertical take-off aircraft and other lightweight aviation platforms need materials that can reduce mass while maintaining adequate structural performance.

Aerospace applications add further demand potential, although qualification requirements remain much stricter than in consumer or automotive markets.

China produced 428,400t of magnesium alloy in 2025, up 8% from the previous year. Stronger lightweighting demand and pressure to reduce carbon emissions supported the increase.

The Tianhao project therefore enters a market where both production and downstream applications are expanding.

China Strengthens Its Magnesium Processing Advantage

Global magnesium metal consumption reached around 1.2mn t in 2025. Magnesium alloy production represented the largest end-use segment at roughly 650,000t.

Other major applications included steel desulphurisation, aluminium alloying and metal reduction. However, magnesium alloy demand is expected to grow fastest as transportation and electronics markets seek lighter materials.

Global magnesium alloy consumption could reach 1.39mn t by 2028 if current growth expectations materialise. NEVs, consumer electronics and low-altitude aviation are expected to provide much of that increase.

China is well positioned to capture this growth because it controls a large share of global magnesium metal production and already has extensive alloying and fabrication capacity.

That advantage could deepen as manufacturers move further downstream into profiles, castings and finished components rather than selling primary magnesium alone.

For international buyers, this creates a familiar critical materials challenge. Strong Chinese integration can deliver low costs and scale, but it also increases geographic concentration across the magnesium supply chain.

The Metalnomist Commentary

Tianhao's project shows that magnesium is moving further into high-growth lightweighting applications. China's advantage lies not only in producing magnesium metal, but increasingly in converting it into higher-value components for EVs, electronics and aerospace.

Lygend Nickel Capacity Reaches 400,000 t/yr at Obi Island

Lygend

Lygend nickel capacity in Indonesia has increased to around 400,000 t/yr in nickel metal equivalent following the commissioning of all phase 2 rotary kiln electric furnace lines at its Obi Island complex.

Lygend nickel capacity now spans nickel pig iron, mixed hydroxide precipitate and nickel sulphate, giving the Chinese producer exposure to both stainless steel and battery supply chains. The latest expansion highlights Lygend's ability to complete large projects despite weaker margins and tighter Indonesian nickel policies.

Lygend nickel capacity growth comes from 12 new RKEF lines commissioned in May. The phase 2 facilities add 185,000 t/yr of nameplate nickel metal equivalent capacity for NPI production in North Maluku.

The expansion strengthens Obi Island's position as one of Indonesia's major integrated nickel production centres and adds more supply to an already heavily concentrated global nickel market.

Obi Island Expansion Deepens Lygend's Integrated Nickel Position

The phase 2 project significantly expands Lygend's pyrometallurgical capacity. NPI produced through RKEF technology remains a major feedstock for stainless steel production, particularly across Asia.

Lygend also produces MHP and nickel sulphate, extending its position beyond stainless steel into battery materials. MHP can be refined into nickel sulphate for lithium-ion battery cathodes, giving the company exposure to multiple downstream markets.

This integrated structure can provide greater flexibility during weak nickel cycles. Producers focused entirely on one product face greater exposure to changes in stainless steel or battery demand.

Obi Island also gives Lygend scale advantages. Concentrating mining, smelting and downstream processing in one industrial location can reduce logistics costs and improve feedstock integration.

The company's ability to complete phase 2 is notable because other Indonesian nickel projects have faced delays, financing problems and weak economics. Higher operating costs and lower nickel prices have made new capacity increasingly difficult to justify.

Indonesian Policy Raises the Bar for New Nickel Projects

Lygend's expansion comes as Indonesia increases government control over nickel production, pricing and exports. Reduced RKAB mining quotas are tightening access to ore and increasing competition for feedstock.

Adjustments to the HPM pricing formula have also raised raw material costs for processors. At the same time, higher royalty rates are putting additional pressure on smelter margins.

These changes are affecting project development. Several NPI and HPAL projects have been delayed, slowed or cancelled as companies reassess returns under weaker market conditions.

The contrast with Lygend is important. Large integrated producers with existing infrastructure, financing and downstream capacity are better positioned to absorb policy changes than smaller standalone operators.

Indonesia's nickel industry may therefore enter a consolidation phase. Future growth could become increasingly concentrated among large producers capable of controlling ore supply, processing costs and multiple product routes.

For the global nickel market, Lygend's new capacity adds further supply pressure. But Indonesia's tighter policy framework could limit how quickly other projects follow.

The Metalnomist Commentary

Lygend's Obi expansion shows that scale and integration are becoming decisive in Indonesia's nickel industry. As margins tighten and Jakarta strengthens control over ore and exports, smaller projects may struggle while established producers continue to consolidate supply.

EU Steel Demand 2026 Shows Only Modest Recovery as Excess Capacity Grows

EU steelmaking

EU steel demand 2026 is expected to recover only modestly, with the OECD forecasting a 1.4% increase across the EU and UK to 153.65mn t. The improvement follows a 1.2% decline in 2025 and falls well short of a meaningful rebound.

EU steel demand 2026 will remain constrained by high energy costs, weak downstream manufacturing and persistent import pressure. Steel production across the EU and UK is forecast at 132.4mn t after falling by 2.4% last year.

EU steel demand 2026 also faces a wider structural problem. Global steel demand remains weak while excess production capacity continues to grow, increasing pressure on prices and trade flows.

New European import measures may provide some support to regional mills, but trade protection alone is unlikely to restore demand without stronger industrial activity.

Europe Remains Trapped Between Weak Demand and Import Pressure

Germany illustrates the depth of the challenge. Steel demand is expected to rise by only 1.1% in 2026 after falling by 6.1% last year.

Weak domestic consumption and high import volumes continue to affect German competitiveness. High electricity and energy costs add further pressure to steelmakers already facing weak utilisation.

France shows an even weaker recovery profile. Demand is expected to increase by just 0.3% after dropping by 12.6% in 2025.

This means European mills may receive some pricing support from tighter import controls without seeing equivalent growth in physical consumption.

That distinction matters. Trade measures can improve domestic market protection, but they cannot replace demand from automotive, construction, machinery and other major steel-consuming sectors.

The risk is that mills face a market where imports are restricted but end-user consumption remains weak. In that environment, production discipline and cost competitiveness become increasingly important.

Global Overcapacity Shifts Growth Toward India and Emerging Markets

Global steel demand is forecast to increase by only 0.4% to 1.812bn t in 2026 after declining by 2.6% last year.

China remains the main drag, with demand expected to fall by 0.6%. In contrast, India is forecast to grow by 6.7%, while Asean steel demand is expected to rise by 3.5%.

Africa is projected to deliver the strongest regional growth at 4.4%. Middle East demand growth is expected to slow sharply to 1.6% from 6.4% because of regional conflict.

Trade flows are also becoming more complex. The OECD warned that some Chinese steel affected by trade restrictions is increasingly moving through third countries before reaching OECD markets.

Chinese semi-finished steel exports to southeast Asia increased by 300% in 2025. Some of that material can be converted into rolled products and subsequently exported into other markets.

Hot-rolled plate and wide coil have shown some of the largest shifts. This makes origin tracking and anti-circumvention measures increasingly important for steel policy.

The longer-term problem is capacity. Global excess steel capacity is projected to increase from 640mn t in 2025 to 745mn t by 2028.

Traditional blast furnace production also remains dominant. Global blast furnace pig iron output stood near 1.3bn t in 2024, roughly ten times direct reduced iron production, with China accounting for around 70% of global blast furnace output.

The Metalnomist Commentary

Europe’s steel problem is increasingly structural rather than cyclical. Import controls may protect prices, but without lower energy costs and stronger downstream manufacturing, excess global capacity will continue to pressure European mills.

GNI Debt Restructuring Exposes Pressure on Indonesia’s Nickel Smelting Model

Gunbuster Nickel Industry

GNI debt restructuring has placed one of Indonesia’s large nickel pig iron producers under court-supervised protection as ore shortages, rising costs and weak market conditions pressure the country’s smelting sector. Gunbuster Nickel Industry will continue operating while negotiating revised debt terms with creditors.

GNI debt restructuring follows a Central Jakarta Commercial Court decision placing the company under Indonesia’s suspension of debt payment obligations framework, known as PKPU. The process temporarily protects GNI from creditor enforcement while it prepares a restructuring proposal.

GNI debt restructuring is strategically important because the company operates 1.8mn t/yr of NPI capacity in North Morowali, Sulawesi. The plant represents a major part of the Chinese-backed RKEF expansion that transformed Indonesia into the world’s dominant nickel producer.

The case also follows financial distress at Huadi Nickel Alloy Indonesia, suggesting that pressure is spreading across parts of Indonesia’s NPI industry rather than remaining confined to a single producer.

Ore Shortages and Higher Costs Squeeze RKEF Producers

GNI operates 25 rotary kiln electric furnace production lines and began production in 2021 following investment of around Yn11bn. The scale of the complex makes its financial difficulties a significant signal for Indonesia’s nickel market.

The immediate problem is feedstock. Market participants have cited difficulty securing enough nickel ore as one factor behind recent production cuts at GNI.

Indonesia’s ore market has tightened as mining quotas, lower effective production and revised pricing rules increase costs for smelters. RKEF facilities depend on a continuous flow of suitable laterite ore, so shortages quickly reduce utilisation and raise unit costs.

Payment delays have added further pressure at GNI. Lower output can weaken cash flow while fixed costs, debt service and operating expenses remain high.

Huadi has faced similar problems. The company halted operations and entered its own debt suspension process after struggling with ore availability, higher feedstock costs and weak market conditions.

These cases show that Indonesia’s large nickel resource base does not automatically guarantee low-cost smelter economics. Ore access, pricing rules, power costs and financing are becoming more important differentiators between producers.

Indonesia’s Nickel Expansion Faces a Profitability Test

Indonesia’s nickel growth model was built on rapid investment in RKEF smelters producing NPI for stainless steel. That expansion created massive new supply, but it also compressed margins across the industry.

Oversupply remains an important problem. Weak nickel pricing makes it harder for higher-cost smelters to absorb rising ore and operating expenses.

Policy uncertainty adds another layer. Changes to mining quotas, ore pricing formulas and downstream regulations make long-term production planning more difficult.

Pressure is also visible beyond NPI. Nickel Industries’ ENC HPAL project and Hanrui’s nickel matte project have faced delays, showing that execution challenges are affecting both stainless-linked and battery-linked nickel routes.

This creates a more selective investment environment. Producers with captive mines, stronger balance sheets and integrated downstream assets are likely to be better positioned than standalone smelters dependent on external ore.

For the global nickel market, financial stress among Indonesian producers could eventually become supply discipline. If distressed plants cut output or remain underutilised, some of the oversupply that pressured nickel prices could begin to unwind.

The Metalnomist Commentary

GNI’s restructuring shows that Indonesia’s nickel dominance is entering a profitability test. The next phase will favour integrated producers with secure ore and strong balance sheets rather than smelters built only for rapid capacity growth.

Nornickel Nickel Surplus Forecast Shrinks as Indonesia Supply Tightens

Nornickel

Nornickel nickel surplus forecast has been cut sharply for 2026 as Indonesian ore constraints, higher feedstock costs and sulphur shortages slow the supply growth that drove recent oversupply. The Russian producer now expects a marginal global surplus of around 20,000t, down from its previous forecast of 240,000t.

Nornickel nickel surplus forecast reflects a major shift in supply conditions. Global nickel production is expected to fall by 5% to 3.71mn t in 2026, marking the first annual decline in a decade, while demand is forecast to rise by 2% to 3.69mn t.

Nornickel nickel surplus forecast also places Indonesia at the centre of the market balance. Lower effective mining volumes, declining ore grades and sharply higher ore prices are tightening feedstock availability for NPI, HPAL and Class 1 nickel producers.

The adjustment follows a 2025 surplus of around 278,000t, when supply increased by 7% and demand rose by 6%. The market is therefore moving from structural oversupply toward a much tighter balance.

Indonesia Ore and Sulphur Constraints Reshape Supply

Indonesia mined around 320mn t of nickel ore in 2025 against an approved quota of 379mn t. For 2026, quotas are expected at around 300mn t, but actual mining could be closer to 270mn t if utilisation remains near 90%.

Lower ore grades further reduce contained nickel availability. Indonesian NPI production fell by 8% year on year in January-May, suggesting smelters are already feeling the impact.

Philippine ore imports could reach around 25mn t this year and offset part of the shortfall. However, Indonesia’s July quota review remains a critical market variable.

Ore economics are tightening as well. Indonesia’s revised pricing formula has doubled or tripled minimum ore prices for some grades.

Nornickel estimates the new system could add as much as $5,000/t to the cost of Class 1 nickel produced from Indonesian feedstock on a cathode-equivalent basis.

HPAL producers face another problem: sulphur.

Middle East disruption has pushed sulphur prices from around $300/t to above $1,000/t. HPAL operations require roughly 10-11t of sulphur for every tonne of nickel produced.

Indonesia sourced more than 75% of its sulphur imports from the Middle East in 2025, leaving battery nickel projects highly exposed to disrupted maritime supply.

Around one-third of HPAL capacity is currently idle, while HPAL production fell by 20% year on year in May.

Nornickel expects Indonesian NPI output to decline by 11% this year and mixed hydroxide precipitate production by 9%. Class 1 nickel supply is forecast to fall by 2%.

Demand Growth Stays Modest as Stainless Scrap Use Rises

Nickel demand is still growing, but not strongly enough to create a clear deficit.

Nornickel expects stainless steel nickel consumption to rise by only 1% this year. Chinese producers are using more scrap, reducing their need for primary nickel units.

China’s average stainless scrap share is expected to increase to 24% in 2026 from 19% in 2025. That change could keep Chinese primary nickel demand in stainless steel broadly flat at around 1.6mn t.

A higher share of 316 stainless partly offsets the scrap effect because 316 contains more nickel than 304. Chinese 300-series stainless output increased by 3% in the first five months of the year, while 200-series production rose by 11%.

Battery-related demand remains stronger.

China’s nickel sulphate output is forecast to rise by 15% to 421,000t of contained nickel in 2026 and reach 455,000t in 2027. Indonesian nickel sulphate production is expected to increase by 18% to 59,000t this year.

Matte output is another growth area. Indonesian nickel matte production is forecast to jump by 48% as conversion from NPI becomes more attractive.

The market could loosen again in 2027. Nornickel expects the surplus to widen modestly to around 55,000t if Indonesian ore quotas increase, sulphur availability improves and new processing capacity ramps up.

The near-term nickel story has therefore changed. Oversupply has not disappeared, but the margin between surplus and balance has narrowed sharply as Indonesian policy and feedstock economics begin to constrain output.

The Metalnomist Commentary

Nickel’s biggest bullish driver is no longer demand acceleration but supply discipline in Indonesia. If ore quotas remain tight and sulphur costs stay elevated, the market could remain far more balanced than recent oversupply trends suggested.

Nickel Industries HPAL Expansion Targets Indonesian MHP Growth Through Acquisitions

Tsingshan

Nickel Industries HPAL expansion will move forward through acquisitions rather than new project development as Indonesia tightens control over additional high pressure acid leach capacity. The Australian producer will acquire stakes in two MHP projects next to its existing Excelsior Nickel Cobalt operation in Central Sulawesi.

Nickel Industries HPAL expansion is strategically important because Indonesia has stopped issuing licences for new HPAL developments since late 2025, according to the company. That makes existing permitted projects increasingly valuable to producers seeking battery-grade nickel growth.

Nickel Industries HPAL expansion covers the planned Teluk Metal Industry and Chengsheng New Energy projects. Together, the stakes would give NI attributable MHP capacity of almost 17,000 t/yr.

Both projects are located in the Indonesia Morowali Industrial Park and will use ore from NI’s Sampala mine. Their output will feed the electric vehicle battery supply chain.

TMI and CNE Add MHP Capacity Around Existing ENC Platform

NI will pay $169mn for a 17.5% stake in the Teluk Metal Industry HPAL project. TMI has planned nameplate MHP capacity of 38,640 t/yr, giving NI 6,775 t/yr of attributable output.

The transaction also carries construction protection from Tsingshan. The Chinese nickel and stainless steel producer has guaranteed that NI’s investment will be capped at $169mn and that TMI will reach nameplate production by September 2027.

This lowers construction risk for NI and reinforces its relationship with Tsingshan, which already owns an indirect 44% stake in the ENC project.

TMI’s remaining ownership includes Singapore-based Sumber International Investment and a South Korean-Japanese consortium involving LS MnM, Hanwa and another strategic investor. The structure shows how Asian industrial groups are positioning themselves around Indonesian battery nickel supply.

NI is also pursuing a 36% stake in the Chengsheng New Energy HPAL project together with a local partner. The acquisition will be funded by transferring 30% of their combined ownership in the Sampala nickel mine.

CNE has MHP capacity of 28,357 t/yr, with 10,208 t/yr attributable to NI. Commissioning is expected by mid-2027.

The CNE transaction still requires shareholder approval because an NI director is associated with the selling investment firm. That adds a governance step before completion.

Indonesia Licensing Limits Increase Value of Existing HPAL Assets

Indonesia’s decision to stop issuing new HPAL licences changes the economics of nickel expansion. Producers can no longer rely on greenfield development to add battery-grade processing capacity.

This gives existing permitted projects a scarcity premium. Companies seeking growth must acquire stakes, partner with current licence holders or expand existing operations.

For NI, TMI and CNE extend the company’s battery nickel platform around ENC. The 46%-owned ENC project is preparing to produce nickel cathode and nickel sulphate, giving NI exposure further downstream than MHP alone.

The strategy also integrates mining and processing. Ore from the Sampala project will supply both TMI and CNE, linking captive feedstock with HPAL conversion and battery-material output.

That integration matters because Indonesia’s nickel industry is increasingly constrained by ore availability, regulatory approvals and government efforts to manage oversupply.

The policy shift could support nickel prices by slowing future HPAL growth. But it also raises the value of projects already holding development rights.

For NI, acquisitions therefore become more than a growth option. They are now the main route to expanding Indonesian MHP production under a tighter licensing regime.

The Metalnomist Commentary

Indonesia’s HPAL licensing freeze is turning permitted projects into strategic assets. Nickel Industries is responding by buying access to existing capacity, showing how policy can shift competition from project development to asset acquisition.

Indonesia NPI Export Exemption Eases Nickel Trade Fears but Leaves Policy Risk

Nickel pig iron

Indonesia NPI export exemption has eased immediate concerns in the nickel market after sources said nickel pig iron will not need to be exported through Danantara Sumberdaya Indonesia. The clarification reduces near-term disruption risk for Indonesia’s dominant nickel alloy product.

Indonesia NPI export exemption matters because more than 90% of Indonesia’s nickel-alloy output is nickel pig iron. NPI is mainly used in stainless steel production and forms the backbone of Indonesia’s nickel downstreaming model.

Indonesia NPI export exemption does not remove all uncertainty. Ferro-nickel exports are still expected to be traded through DSI, while the industry lacks an official definition that clearly separates ferro-nickel from NPI.

That ambiguity is important because ferro-nickel and NPI share the same HS code under global and Indonesian trade frameworks. Market participants usually distinguish them by nickel content, with ferro-nickel typically above 20% nickel and NPI usually around 10-14%.

NPI Exclusion Protects Indonesia’s Core Nickel Flow

The exclusion of NPI from the DSI export requirement is commercially significant. NPI is Indonesia’s largest nickel product by volume and a critical feedstock for stainless steelmakers.

If NPI had been included, the rule could have disrupted contracts, pricing, payment flows and export execution across a major share of Indonesia’s nickel industry. That risk has now been reduced, at least for the near term.

The clarification also helps Chinese and regional stainless steel buyers. These customers rely heavily on Indonesian NPI because it offers a cost-effective alternative to pure nickel metal in stainless production.

However, the inclusion of ferro-nickel still matters. A small number of Indonesian smelters produce higher-nickel ferro-nickel, and those exports may now face a more centralised transaction structure through DSI.

The policy could therefore split Indonesia’s nickel alloy market into two regulatory paths. NPI would remain outside the new state export channel, while ferro-nickel would fall under tighter government control.

The risk is classification. Without a formal technical definition, exporters may face uncertainty over which products qualify as NPI and which are treated as ferro-nickel.

Policy Clarity Still Matters for Investment

Indonesia announced on 20 May that exports of key commodities, initially including palm oil, coal and ferro-alloys, must be routed through DSI. The aim is to centralise control over strategic commodity exports.

The nickel industry welcomed the NPI clarification, but investors remain cautious. Indonesia’s mining and metals policy has changed frequently, creating uncertainty around timing, scope and implementation.

This matters because downstream nickel projects require large capital commitments. Smelters, matte converters, HPAL plants and battery-material facilities all need stable rules before investors can justify long payback periods.

The DSI rule follows other policy shifts, including changes to ore pricing, royalty plans, export levies and RKAB approval processes. Even when policies support state revenue and downstreaming, sudden changes can raise financing risk.

Indonesia still holds enormous leverage in global nickel. Its dominance in NPI and stainless-linked supply gives Jakarta significant influence over trade flows and pricing.

But policy predictability is now becoming just as important as resource control. If rules change too quickly or remain unclear, investors may delay decisions even when Indonesia remains the strongest nickel platform.

The NPI exemption is therefore a useful correction. But the market still needs formal definitions, clear transaction rules and stable implementation before confidence fully returns.

The Metalnomist Commentary

Indonesia has reduced immediate nickel disruption by excluding NPI from the DSI export channel. But the ferro-nickel ambiguity shows that policy risk remains embedded in the country’s downstreaming model.

Indonesia Metals Investment Risk Rises as Policy Shifts Cloud Downstreaming

Indonesia Nickel mining

Indonesia metals investment faces growing uncertainty as frequent policy changes test foreign investor confidence in the country’s mining and processing sector. Jakarta’s latest move to route key commodity exports through a new state-owned enterprise adds another layer of complexity to an already policy-heavy operating environment.

Indonesia metals investment has been supported for years by the country’s downstreaming strategy, especially in nickel. However, investors are now watching whether sudden changes in royalties, export levies, price floors, export proceeds rules and RKAB approvals could weaken the economics of new projects.

Indonesia metals investment remains strategically important because the country dominates global nickel supply and is attracting major aluminium, battery, ferro-alloy and electric vehicle-related projects. But policy direction and policy predictability are not the same thing.

The government’s natural resource strategy is clear. It wants tighter export control, higher state revenue, more domestic value addition and greater retention of foreign exchange. The main concern is how quickly and broadly those rules are implemented.

DSI Export Rule Adds New Uncertainty to Nickel Downstreaming

The planned use of Danantara Sumberdaya Indonesia as a state export channel is the clearest sign of Jakarta’s tightening control over commodity flows. The policy initially targets palm oil, coal and ferro-alloys, but nickel market participants expect broader implications.

Nickel pig iron is likely to be affected because it is a ferro-alloy. That matters because Indonesia’s nickel growth has been built around NPI, stainless steel, nickel matte and battery-material processing.

A centralised export model could reshape how contracts, pricing and payments are handled. If DSI becomes the sole counterparty for overseas buyers, private producers and traders may lose commercial flexibility.

The policy follows several other changes. Indonesia has revised government-mandated price floors, required export proceeds to remain in domestic banks for at least 12 months, adjusted royalty rates, introduced export levy plans and modified the RKAB application process.

These measures all fit Jakarta’s broader resource nationalism agenda. But rapid revisions make it harder for companies to model long-term returns.

Nickel producers have already faced uncertainty over royalty and export duty proposals. The government announced planned changes in April, then postponed them in May before the intended June start date.

This pattern may show that officials are willing to listen to industry feedback. But it also suggests that policy design and communication remain incomplete before major measures are announced.

The risk is that investors begin pricing Indonesia as a less predictable jurisdiction. That could slow downstreaming projects, especially those requiring large capital commitments, long payback periods and imported technology.

Several battery and nickel projects have already faced delays from feedstock constraints, regulatory approvals or weaker market conditions. These include projects linked to Chengtun, Hanrui and LG Energy Solution.

Some operations have also cut or halted production because of delayed or insufficient RKAB approvals. This shows how permitting and quota decisions can directly affect physical output.

Aluminium and Manganese Projects Face Spillover Risk

The market’s immediate focus is nickel, but the risk is wider. If the DSI model expands across more strategic commodities, aluminium and manganese investors could also face new pricing and export constraints.

Chinese aluminium producers have been increasing overseas investment in Indonesia since China imposed a 45mn t/yr cap on domestic primary aluminium capacity. Indonesia offers power access, industrial park infrastructure and proximity to Asian growth markets.

Tsingshan is building an 800,000 t/yr aluminium smelter in Indonesia. Nanshan Aluminium plans to expand its Bintan Industrial Park facility to 500,000 t/yr, while Hua Chin Aluminum Indonesia commissioned a 500,000 t/yr smelter in 2025.

Some Chinese companies are also considering downstream aluminium processing projects in Indonesia. These investments would move the country beyond smelting and into fabricated products.

But discounted sales from Chinese-invested Indonesian smelters could become harder if aluminium exports are eventually routed through DSI. A state-controlled export platform may not allow the same commercial discounting that buyers currently use.

That would raise costs for Chinese buyers and could change the economics of Indonesia-based aluminium supply chains. It could also affect trade flows if producers lose flexibility in pricing and contract structures.

Manganese may also be exposed. Tsingshan has invested in Indonesian manganese production, with six lines and combined capacity of 100,000 t/yr.

The broader lesson is that Indonesia’s downstreaming success depends on credibility as well as control. Investors can adapt to higher royalties, stricter export rules or local processing requirements if implementation is clear and stable.

Uncertainty is more damaging than regulation itself. If companies cannot predict which products will be covered, how prices will be set or when rules will take effect, they may delay capital spending.

Indonesia still has enormous strategic leverage in nickel and growing relevance in aluminium, manganese and battery materials. But maintaining that position will require policy discipline, transparent consultation and practical implementation.

The Metalnomist Commentary

Indonesia is not retreating from downstreaming; it is tightening state control over the value chain. The danger is that too many rapid policy shifts could weaken the investment confidence needed to build the very processing base Jakarta wants to protect.

European Ferro-Molybdenum Prices Hit Three-Year High on Concentrate Squeeze

Ferro-Molybdenum

European ferro-molybdenum prices have climbed to a three-year high as tight molybdenum concentrate supply, stronger Chinese steel demand and logistical constraints push the market higher. The rally has lifted prices sharply since the start of the year.

European ferro-molybdenum prices were last assessed at $70.90-71.50/kg in-warehouse Rotterdam on 19 May, up by about 25% from the start of the year. Molybdenum oxide prices also rose to $30.50-30.80/lb duty unpaid Rotterdam, up by 28% over the same period.

European ferro-molybdenum prices are being driven mainly by raw material tightness rather than a broad recovery in European steel demand. Molybdenum concentrate availability has tightened structurally, limiting oxide and ferro-molybdenum production flexibility.

The key problem is that molybdenum is mostly produced as a by-product of copper mining. That means supply cannot quickly respond to higher prices, leaving the market exposed when concentrate availability tightens or downstream demand rises.

Concentrate Tightness Drives the Molybdenum Chain Higher

Molybdenum concentrate is the starting point for the supply chain. It is converted into molybdenum oxide, which then feeds ferro-molybdenum production for alloy steel and stainless steel applications.

Concentrate prices in China have risen by about 29% since January, peaking at 5,235 yuan/mtu on 13 May. That cost increase has moved through the value chain and supported higher oxide and ferro-molybdenum prices.

Chinese steel demand has intensified the squeeze. Mills purchased around 30,000t of ferro-molybdenum in March-April, up 10% from a year earlier.

This buying absorbed much of China’s available spot concentrate and oxide supply. As a result, less material has been available for export to other consuming regions.

Market participants initially expected demand to slow after pre-holiday buying ahead of the 1-5 May Labour Day holiday. Instead, sustained steel mill demand kept buyers active and tightened availability further.

The Centerra Gold Langeloth outage in the US also supported the rally. An explosion near the facility’s acid unit on 29 January led to a suspension of operations, removing an important source of molybdenum oxide and ferro-molybdenum from the prompt market.

The facility’s direct global supply share is limited. However, its outage tightened nearby availability and strengthened bullish sentiment, allowing traders and producers to raise offers more aggressively.

Supply Constraints Outweigh European Demand Recovery

The current rally is largely supply-led. European steel demand has not recovered strongly enough to explain the scale of the price increase on its own.

Logistical constraints have made the situation worse. Financing, freight and inventory bottlenecks have reduced spot availability among trading firms.

Some sellers have also withheld material in expectation of further price gains. At the same time, buyers have resisted higher offers, reducing spot liquidity and creating sharper price movements.

Truckload enquiries have remained limited in recent weeks. This suggests that physical tightness and cautious seller behaviour are driving prices more than a surge in end-user consumption.

For alloy producers and steelmakers, the rally raises cost pressure. Ferro-molybdenum is used to improve strength, corrosion resistance and high-temperature performance in steels used across energy, chemicals, engineering, defence and industrial equipment.

The market’s vulnerability reflects molybdenum’s by-product nature. Even if prices rise sharply, copper mines cannot quickly increase molybdenum output just to meet alloy demand.

That makes the molybdenum chain highly sensitive to disruptions. Concentrate shortages, converter outages, Chinese buying and trading bottlenecks can all create price moves that exceed the underlying change in steel consumption.

The Metalnomist Commentary

The molybdenum rally shows how by-product metals can move violently when small supply disruptions meet concentrated demand. European buyers are not facing a simple steel-demand story; they are facing a raw material chain where concentrate availability now controls ferro-alloy pricing.

Weda Bay Power Shift Favors Aluminium as Nickel Pig Iron Margins Weaken

Weda Bay

Weda Bay power shift plans could redirect electricity from nickel pig iron smelters toward aluminium production in Indonesia’s Weda Bay Industrial Park. The move shows how power allocation is becoming a strategic production tool when aluminium margins exceed nickel margins.

Weda Bay power shift discussions involve scaling back output at 22 NPI smelting operations in June. Market sources said the power would be redirected to Juwan, the park’s sole operating aluminium facility.

Weda Bay power shift strategy reflects changing metal economics. NPI producers are under pressure from higher nickel ore costs and weaker margins, while aluminium smelters are benefiting from firmer prices and Middle East supply concerns.

Juwan is a joint venture between Tsingshan and Xinfa, with nameplate capacity of 250,000 t/yr. The timing and scale of any NPI production cuts remain unclear.

Aluminium Margins Pull Power Away From NPI

The planned power reallocation highlights the importance of electricity in Indonesian metals production. Both NPI and aluminium smelting are power-intensive, so the most profitable metal can influence where electricity is directed.

Aluminium prices have strengthened because of supply disruption linked to the Middle East. The region accounts for about 9% of global aluminium output, making any disruption significant for global balance.

The LME aluminium cash official price rose to a four-year high of $3,767.50/t on 14 May before closing at $3,636/t on 18 May. These higher prices have improved aluminium smelting margins.

NPI margins are moving in the opposite direction. Rising nickel ore costs and weaker profitability have reduced the incentive to maintain full output at some Indonesian smelters.

This creates a clear commercial logic. If electricity is constrained or strategically controlled, producers may prefer to allocate power toward aluminium rather than lower-margin NPI.

NPI Cuts Could Tighten High-Grade Nickel Units

Any sustained reduction in Weda Bay NPI output could support nickel pig iron prices, especially for higher-grade material. Higher-grade NPI remains important for stainless steel producers that need nickel-rich blending units.

Demand for higher-grade NPI has stayed relatively firm because stainless mills are using more scrap. Greater scrap use can increase the need for higher-nickel inputs to balance melt chemistry.

The situation also shows how Indonesia’s nickel and aluminium industries are becoming increasingly connected through infrastructure. Power, ports, industrial parks and Chinese-backed investment now shape multiple metal supply chains at once.

Tsingshan is also building a new aluminium project at Weda Bay with designed capacity of 800,000 t/yr. The first 400,000 t/yr phase is expected to start by the end of this year or in early 2027.

That expansion could make power allocation even more important. If aluminium capacity grows while NPI margins remain weak, Weda Bay may increasingly prioritise aluminium production over nickel pig iron during periods of electricity constraint.

The Metalnomist Commentary

Weda Bay shows that Indonesia’s industrial parks are becoming flexible metal platforms, not single-commodity hubs. When aluminium margins beat NPI margins, electricity itself becomes the deciding raw material.

Nickel Ore Prices Fall as Philippine Supply Recovery Eases Feedstock Tightness

Philippine Nickel ore

Nickel ore prices have fallen as Philippine supply recovered after the monsoon season, while a correction in London Metal Exchange nickel weakened sentiment across the value chain. The decline shows how quickly seasonal ore flows can pressure feedstock markets when Indonesian buyers slow procurement.

Nickel ore prices for 1.3% grade material on a cif China basis dropped to 55-57 yuan/wmt on 14 May from 65-66 yuan/wmt on 26 March. The fall came even though LME nickel remained above late-March levels after briefly touching almost two-year highs earlier in May.

Nickel ore prices are important because ore often gives the earliest physical signal in the nickel chain. Unlike LME nickel, ore prices are less driven by financial flows and more directly tied to mine supply, port congestion, smelter demand and buyer inventories.

The current weakness reflects three forces moving together: Philippine mine supply is recovering, Indonesia is slowing purchases, and LME nickel has corrected after earlier policy-driven gains.

Philippine Supply Recovery Changes the Regional Ore Balance

The Philippines is entering its seasonal production recovery after monsoon-related disruptions. Mining activity in Surigao, the country’s main nickel ore hub, usually slows from November to March and rebounds from May.

Surigao accounts for around half of Philippine nickel ore output. As shipments recover, buyers have more nearby feedstock options, reducing the urgency that supported prices earlier in the year.

This seasonal pattern has become more important since Indonesia emerged as a major Philippine ore importer. Historically, Chinese buyers stocked up ahead of the rainy season and drew down inventories until supply returned. But Indonesia’s rising demand has added a second major pull on Philippine material.

The Philippines exported 55.22mn t of nickel ore in 2025. China took 72% of that volume, while Indonesia accounted for 18%.

Indonesia’s imports from the Philippines rose to 15.48mn t in 2025 from 9.55mn t in 2024. That growth was driven by tight domestic ore controls under Indonesia’s RKAB quota system.

Indonesia imported 1.41mn t of Philippine nickel ore in March, up sharply from both a year earlier and the previous month. But that buying momentum has now slowed as port bottlenecks and price uncertainty weigh on procurement.

Indonesia Bottlenecks and NPI Margins Pressure Demand

Most Philippine ore shipped to Indonesia moves to the Weda Bay industrial park. The site produced around one third of Indonesia’s total nickel supply in 2025, making it a major feedstock demand centre.

But Weda Bay has limited unloading capacity. Only two major berths handle nickel ore discharge, creating recurring congestion.

Some vessels that would normally unload within two days are waiting up to two weeks. That congestion reduces buyers’ willingness to secure additional cargoes, especially when prices are falling.

Indonesia’s revised ore pricing formula has also changed buyer behaviour. The new formula includes cobalt, iron and chromium values, raising raw material costs and adding uncertainty to procurement decisions.

Meanwhile, LME nickel’s pullback has started to pressure nickel pig iron prices. NPI prices had been relatively steady, supported by stainless steel demand, but softer benchmark prices are now weakening producer margins.

Lower margins can reduce production incentives for Chinese NPI producers. That, in turn, may reduce demand for nickel ore and extend downward pressure on feedstock prices.

Nickel sulphate prices have remained stable because tight supply has offset weak demand from the nickel-cobalt-manganese battery sector. But the ore market is moving faster because supply is returning and buyers are stepping back.

The short-term outlook remains soft. Rising Philippine availability, weaker LME sentiment and slower Indonesian buying are likely to keep nickel ore under pressure until the market finds a new floor.

The Metalnomist Commentary

Nickel ore prices are showing that Indonesia’s downstream expansion has made Philippine supply more strategically important. But when port bottlenecks, weaker NPI margins and seasonal supply recovery hit together, even tight Indonesian ore controls cannot prevent a feedstock correction.

Battery Metals Demand Faces Slower Path as Hybrid Vehicle Growth Extends

Battery Metals

Battery metals demand could face a slower growth path as carmakers and suppliers expect hybrids and range extenders to remain important for longer than earlier electric-only transition models assumed. Speakers at the FT Future of the Car summit said vehicle decarbonisation should be measured by emissions reduction, not only battery electric vehicle share.

Battery metals demand remains structurally supported by electrification. However, a longer hybrid phase could reduce near-term demand intensity for lithium, nickel, cobalt and manganese because hybrid vehicles use smaller battery packs than full battery electric vehicles.

Battery metals demand assumptions are therefore becoming more complex. Automotive electrification is still progressing, but the industry is moving toward a mixed powertrain future rather than a simple shift from combustion engines to full BEVs.

Horse Powertrain chief executive Matias Giannini said half of passenger vehicles could still be produced with some form of combustion or hybrid powertrain by 2040. That outlook would keep investment flowing into efficient hybrid systems alongside EV platforms.

Hybrid Growth Changes the Battery Raw Materials Curve

Hybrid vehicle growth could temper the pace of battery raw material demand without reversing electrification. Hybrids and range extenders still require electric motors, inverters, wiring and batteries, but their battery packs are much smaller than those used in BEVs.

This matters most for nickel. High-nickel NCM and NCA batteries are closely tied to longer-range BEVs, where larger packs are needed to deliver performance and driving range.

A slower BEV ramp-up could delay some of the nickel sulphate demand growth that has supported investment cases for new battery-grade nickel projects. It could also affect cobalt and manganese demand in cathode chemistries exposed to full EV penetration rates.

Lithium remains supported across almost every electrification pathway. Still, a longer hybrid transition could slow the rate at which large-format BEV batteries absorb lithium units.

The shift does not mean automotive metals demand will weaken across the board. Hybrids use more copper than conventional combustion vehicles because they require electric motors, power electronics and more complex wiring systems.

Continued hybrid and combustion production also supports aluminium castings, stainless steel, exhaust components and engine-related materials. Meanwhile, BEV growth still supports aluminium lightweighting, copper wiring, charging infrastructure and battery materials.

The result is a less linear automotive metals outlook. Battery metals may grow more slowly than aggressive BEV scenarios suggest, while broader automotive metals consumption remains supported by platform complexity and mixed powertrain production.

Policy Flexibility Could Reshape European Metal Demand

European suppliers are pushing for more flexibility in the EU regulatory framework. Current policy remains heavily weighted toward full electrification through tailpipe emissions targets.

The EU targets a 100% reduction in tailpipe emissions from new cars and vans from 2035. That effectively ends new combustion engine sales unless future exemptions are created.

Industry participants increasingly want a more technology-neutral route. They argue that hybrids, range extenders, renewable fuels and lower-carbon manufacturing should contribute to emissions reduction alongside BEVs.

This policy debate matters for metals. Battery material demand depends heavily on BEV penetration, average pack size and chemistry choice.

If Europe allows a longer role for hybrids and range extenders, lithium-ion battery capacity demand per vehicle could grow more slowly. That would affect demand forecasts for lithium, nickel, cobalt and manganese.

Chinese EV and hybrid technology is also improving quickly. This puts pressure on European and US automakers to share development costs across BEV, hybrid and range-extender platforms.

For suppliers, the strategic issue is flexibility. Companies tied only to high-growth BEV battery assumptions may face demand timing risk, while suppliers serving copper, aluminium, stainless steel, electronics and hybrid systems may benefit from a broader platform mix.

The automotive transition is still real, but the material demand path is becoming more diversified. Metals markets must now track powertrain mix, not only EV sales headlines.

The Metalnomist Commentary

Hybrid growth does not weaken the energy transition, but it changes the metals timing. Battery metals demand will still rise, yet copper, aluminium and hybrid-related materials may capture more value if automakers choose a longer mixed-powertrain route.

India Critical Minerals Supply Chain Faces Funding Gap Despite Policy Push

Indonesia nickel mining

India critical minerals supply chain ambitions face a major financing test as the country tries to reduce dependence on imported lithium, cobalt, nickel and rare earth materials. A new report from the Institute for Energy Economics and Financial Analysis warns that funding gaps, slow policy execution and raw material import dependence could delay India’s strategy.

India critical minerals supply chain development is becoming urgent because the country imports 100% of the lithium, cobalt and nickel used in clean energy manufacturing. Demand is expected to rise as India targets 30% electric vehicle penetration by 2030, along with 230GW of solar capacity and 140GW of wind capacity.

India critical minerals supply chain policy has moved quickly on paper. The government launched the National Critical Mineral Mission in January 2025 with a seven-year budget of 343bn rupees to support exploration and auctions.

However, the mission still lacks enough direct capital expenditure support for large-scale mining, refining and processing. That is the central weakness in India’s current critical minerals push.

Exploration Targets Need Processing Capital

The National Critical Mineral Mission targets 1,200 exploration projects and more than 100 critical mineral block auctions by 2030-31. This can improve domestic resource visibility, but exploration alone will not create battery, magnet or semiconductor supply chains.

Critical minerals projects require large upfront capital, long permitting timelines and technical processing capability. Mining projects can take 10-15 years to move from exploration to commercial production, creating long periods of uncertainty for investors.

India has identified major resource potential. The country reported 5.9mn t of inferred lithium resources in Jammu and Kashmir as of 2023. It also holds 13.15mn t of monazite deposits containing an estimated 7.23mn t of rare earth oxides.

The Geological Survey of India also identified 482.6mn t of rare earth ore resources through exploration projects in February. These figures suggest significant geological potential, but they do not solve the refining and separation challenge.

Rare earths are a clear example. Monazite and rare earth ore must be separated, purified, converted into metals or alloys, and qualified by downstream users before they can support magnets, defence systems, electronics or clean energy applications.

India’s midstream sector also faces pressure from Chinese overcapacity. China controls around 60-70% of global refining and processing capacity for key minerals such as lithium, nickel and cobalt, and about 90% of rare earth refining.

That dominance suppresses margins and makes new Indian refining projects harder to finance. Without price support, offtake contracts or direct capital backing, investors may hesitate to fund projects that compete against established Chinese capacity.

Import Dependence Extends Beyond Battery Metals

India’s critical minerals strategy now reaches beyond battery materials. The government classified coking coal as a critical and strategic mineral in January to reduce import dependence and support steel expansion.

This widens the funding challenge. India aims to increase crude steel production capacity to 300mn t/yr by 2030 and 500mn t/yr by 2047. Its Mission Coking Coal targets domestic output of 140mn t/yr by 2030, up from 66.49mn t/yr in fiscal 2025-26.

These goals will require long-term investment in mining, washing, transport, processing and related infrastructure. That makes critical minerals policy a broader industrial financing issue, not only an energy transition issue.

India is also seeking overseas supply partnerships. It is working with Australia, Argentina, Peru, Chile, Zimbabwe, Mozambique, Malawi and Côte d’Ivoire to secure access to critical minerals.

State-backed Khanij Bidesh India is also pursuing overseas lithium and cobalt assets. These efforts can reduce raw material risk, but they still need downstream processing and domestic industrial integration.

The global funding requirement is enormous. The International Energy Agency estimates that mining and refining will need $915bn in new investment during 2026-35 under its Announced Pledges Scenario.

For India, the strategic question is how to convert policy ambition into bankable projects. Auctions and exploration can identify resources, but refining plants, processing hubs, offtake agreements and financing tools will decide whether domestic supply chains actually emerge.

The Metalnomist Commentary

India has recognised the critical minerals problem, but recognition is not the same as industrial capacity. The next stage must focus on project finance, refining economics and guaranteed demand, or India will remain dependent on imported materials despite its resource potential.

Stellantis Leapmotor Spain BEV Production Plan Signals Localised Chinese EV Strategy

Stellantis

Stellantis Leapmotor Spain BEV production plans could mark a new phase in Europe’s electric vehicle supply chain, as western automakers look to combine local assembly with lower-cost Chinese components. Stellantis and Leapmotor are considering new battery electric vehicle lines at Zaragoza and Villaverde in Spain through their Leapmotor International joint venture.

Stellantis Leapmotor Spain BEV production would move the partnership beyond vehicle imports and toward European manufacturing. That shift matters because local content rules, tariff risk and regional supply security are becoming more important in the EV market.

Stellantis Leapmotor Spain BEV production could also help the companies respond to weaker European affordability conditions. Chinese component sourcing can lower cost, while Spanish assembly may improve regulatory and commercial positioning inside Europe.

The companies have not disclosed production targets, utilisation rates or investment figures. This leaves the scale of the plan uncertain, but the strategic direction is clear.

Spain Could Become a European Platform for Leapmotor Models

Zaragoza could gain a new all-electric SUV line as early as this year. The plant has long been associated with Opel production and could become a base for new BEV output under the joint venture.

Villaverde in Madrid may also become more important to Leapmotor International. The plant faces a production gap after Citroen C4 output ends and may shift entirely to Leapmotor models by 2029.

That potential transition would give Stellantis a way to protect industrial activity at existing Spanish plants while adding lower-cost BEV models to its European portfolio.

The plan reflects a broader industry pattern. European automakers are trying to defend market share against Chinese EV competition while also using Chinese platforms, components and cost structures to improve competitiveness.

Stellantis bought a 21% stake in Leapmotor in 2023 and created a 51-49 joint venture to sell and manufacture Leapmotor vehicles outside China. Spain could now become one of the key production bases for that strategy.

For Spain, the opportunity is industrial. More BEV assembly could support jobs, supplier activity and demand for local logistics, batteries, wiring, aluminium components and electronics integration.

Local Assembly Meets Cost Pressure and Supply-Chain Rules

The move from imports to local production is strategically important. European BEV manufacturing is increasingly shaped by tariffs, local content rules, battery sourcing requirements and political pressure to keep vehicle production inside the region.

Leapmotor brings cost-competitive EV engineering and components. Stellantis brings European plants, distribution, regulatory experience and manufacturing scale.

This combination could help address one of Europe’s biggest EV problems: producing affordable electric vehicles while maintaining regional industrial capacity.

However, the lack of disclosed volumes makes the market impact difficult to judge. Without production targets, it is unclear whether the Spain plans will materially change Stellantis’ European BEV output.

Stellantis needs stronger BEV momentum. Its BEV sales accounted for around 13% of output in the first half of last year, behind Volkswagen and BMW, and the company later reported a major write-down after cutting prices.

Leapmotor is growing much faster. Its EV sales, including plug-in hybrids, more than doubled last year to 596,000 units. That growth gives Stellantis access to a Chinese partner with clear scale momentum.

The industrial implication extends into materials. More European BEV production increases demand for aluminium body and structural parts, copper wiring, electrical steel, battery materials, power electronics and lightweight components.

If the model works, Stellantis and Leapmotor could create a template for Chinese-designed, Europe-built EVs. That would reshape competition not only in vehicles, but also in the upstream materials and component chains that support regional BEV manufacturing.

The Metalnomist Commentary

Stellantis and Leapmotor are not only discussing new Spanish EV lines; they are testing a hybrid supply-chain model for Europe. Local assembly with Chinese components may become a practical route for automakers caught between cost pressure, tariff risk and the need to keep European factories active.

China Vanadium Prices Weaken as Supply Rises and Steel Demand Slows

China Vanadium

China vanadium prices are under renewed pressure as higher spot availability, weak alloy demand and softer steel mill tenders weigh on the market. Domestic 98% grade vanadium pentoxide flake prices fell to 82,000-87,000 yuan/t on 8 May, their lowest level since 20 April.

China vanadium prices began to soften in late April after alloy producers slowed purchases and cut procurement bids. Most ferro-vanadium producers lowered feedstock buying levels after steel mill tender prices came in below market expectations.

China vanadium prices are also being pressured by rising output. Domestic vanadium production reached 56,040t of vanadium pentoxide in January-April, up 7.6% from a year earlier.

The market is now facing a classic supply-demand imbalance. Higher vanadium flake and slag production has increased spot availability, while steel-sector demand remains weak and export outlets are slowing.

Higher Flake and Slag Output Increases Spot Availability

China’s vanadium supply increased because stronger earlier prices encouraged producers to lift output from vanadium-bearing steel slag. Vanadium-containing steel slag production rose to 49,320t in January-April, up 8% from a year earlier.

Higher flake prices in the first four months improved margins for slag-based production. Domestic 98% grade vanadium pentoxide flake averaged 80,812 yuan/t ex-works during January-April, up 9.5% from a year earlier.

New capacity has also added pressure. Qinhuangdao Baigong Steel started a 10,000 t/yr vanadium pentoxide flake production line in Hebei province in February.

This additional output arrived just as downstream buying slowed. Major flake suppliers had not finalised some contracts by 8 May, while some alloy producers were buying only limited volumes at lower cash prices.

The increase in spot availability has changed buyer behaviour. Alloy producers are no longer rushing to secure feedstock because they expect further price weakness.

That expectation can reinforce the decline. When buyers delay purchases, sellers face more pressure to reduce offers, especially when inventories rise and steel demand remains poor.

Weak Steel Tenders and Export Slowdown Limit Demand

Ferro-vanadium demand remains the main drag on the vanadium market. Domestic 50% grade ferro-vanadium prices fell to 93,000-94,000 yuan/t ex-works on 8 May, their lowest level since 1 April.

Steel mill tender prices also declined. Prices paid by steelmakers fell to 94,000-95,000 yuan/t delivered, including VAT and payable by acceptance bill, down from late-April levels.

Steelmakers are lowering bids because steel margins remain weak. This is especially important for vanadium because much of its demand comes from alloying in rebar and other steel products.

China’s rebar production fell to 29.54mn t in January-April, down 8.6% from a year earlier, as the real estate slowdown continued to reduce construction-related steel demand.

Steelmakers purchased an estimated 6,865t of vanadium alloys in April, down 17% from a year earlier. This confirms that weaker steel consumption is now feeding directly into lower vanadium alloy demand.

Export conditions are also turning less supportive. China’s vanadium flake exports are expected to decline in the coming months as international production increases.

Canadian producer Largo more than doubled vanadium pentoxide output in the first quarter to 2,616t, supported by higher-grade ore and steadier processing at its Brazilian mine. Russian producer Evraz also started a new 15,000 t/yr vanadium pentoxide flake plant in March and is expected to ramp up by June.

These additions reduce the need for some overseas buyers to rely on Chinese flake. That weakens a potential outlet for excess Chinese supply.

The near-term outlook remains soft. Unless steel mill tenders recover or vanadium exports improve, rising spot availability will likely keep pressure on vanadium pentoxide flake and ferro-vanadium prices.

The Metalnomist Commentary

China’s vanadium market is being hit by the wrong combination: rising supply, weak rebar output and cautious alloy buying. The longer-term battery storage story remains attractive, but near-term pricing still depends heavily on steel demand and feedstock discipline.

JSL Stainless Steel Sales Rise as Indian Demand Offsets Trade Pressure

JSL stainless steel

JSL stainless steel sales increased in the 2025-26 financial year as strong domestic demand supported broader adoption across infrastructure, mobility, defence and industrial sectors. Indian producer Jindal Stainless sold 2.5mn t of stainless steel during the year to 31 March, up 8% from 2.3mn t a year earlier.

JSL stainless steel sales were driven mainly by India’s internal market. Domestic sales accounted for 92% of annual volumes, showing that the company is prioritising local demand while global trade conditions remain uncertain.

JSL stainless steel sales dipped slightly in January-March to 641,743t from 649,857t in the previous quarter. The company attributed the decline partly to energy-related constraints linked to geopolitical uncertainty in the Middle East.

The result highlights India’s growing role as a stainless steel demand centre. Consumption is expanding beyond conventional industrial uses into electric vehicles, trailers, containers, real estate, defence, aerospace and infrastructure.

Domestic Demand Anchors Volume Growth

Indian stainless steel demand remained the main growth engine for JSL. Government-backed infrastructure programmes and rising preference for longer-life materials supported consumption across multiple end-use sectors.

Stainless steel is gaining ground where durability, corrosion resistance and lifecycle cost matter. This is particularly relevant for coastal infrastructure, transport equipment, public works, defence systems and industrial applications.

Electric vehicles and trailers are also becoming more important. These sectors use stainless steel for strength, corrosion resistance and long-term reliability in components exposed to demanding operating conditions.

JSL’s domestic focus gives it some insulation from weak or volatile export markets. A strong home market allows the company to keep capacity utilisation higher while managing margin pressure from global competition.

The company is also preparing for further growth. JSL plans to increase annual melt capacity to 4.2mn t during the current financial year ending 31 March 2027.

That expansion will strengthen its position in India’s stainless market. However, the company will need sustained domestic demand growth to absorb the additional capacity without weakening prices.

Imports and Energy Costs Shape Competitive Risk

JSL continues to face pressure from Chinese-origin and Vietnamese stainless steel imports. The company warned that substandard material is allegedly being rerouted through ASEAN countries, raising concerns about trade circumvention and domestic input quality.

This issue matters because import pressure can undermine local producers even when domestic demand is healthy. Low-priced or poor-quality imports can distort pricing, weaken margins and create risks for downstream users.

Trade defence therefore remains important for India’s stainless steel industry. Domestic producers need fair competition if they are expected to invest in higher-value capacity and support national manufacturing goals.

Energy costs are another risk. JSL said geopolitical uncertainty in the Middle East affected sourcing of propane, LPG and natural gas used in stainless steel manufacturing.

This shows how stainless steel production remains exposed to energy supply chains. Even when demand is strong, fuel availability and cost can affect output, margins and quarterly shipment performance.

Exports remained steady despite geopolitical conflicts and tariff uncertainty. JSL is building its presence in Japan, South Korea, Taiwan and Germany, supported by its value-added product portfolio.

This export strategy is important because value-added stainless products can help protect margins. Higher-specification products are less exposed to commodity price competition and more dependent on quality, qualification and customer relationships.

The Metalnomist Commentary

JSL’s performance shows that India’s stainless steel market is becoming a domestic demand story rather than an export-led one. The company’s next challenge is to defend quality and margins as imports, energy volatility and capacity expansion reshape competition.