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.

NPI–Class I Nickel Spread Narrows as Metal Oversupply Pressures Prices

Nickel cathode

NPI–class I nickel spread narrowed sharply in March as persistent oversupply in the class I nickel market pushed metal prices lower, while nickel pig iron prices stayed supported by elevated production costs. The average spread fell to $2,975/t in March, down from the 2025 annual average of $3,696/t.

The narrower NPI–class I nickel spread shows how differently the two nickel markets are behaving. Class I nickel remains under pressure from high exchange stocks and weak absorption from battery and alloy users. NPI, by contrast, is being held up by Indonesian ore costs and a firmer production cost floor.

The current spread also discourages additional class I output from NPI conversion. Estimated conversion costs from NPI to class I nickel remain around $4,000/t, meaning producers using NPI as feedstock would face negative margins at current price levels.

This creates an important signal for the nickel supply chain. Oversupply is still weighing on refined metal, but high feedstock and processing costs are preventing prices from falling evenly across all nickel products.

Class I Nickel Oversupply Keeps Metal Prices Under Pressure

Class I nickel oversupply remains the main reason behind the compressed spread. London Metal Exchange nickel stocks reached 289,506t on 26 February, the highest level since May 2018.

Ample exchange inventory has pressured class I nickel prices and opened an import arbitrage window into China. China’s nickel imports rose by 18% in January-February as lower overseas prices made imported metal more attractive.

However, end-user demand has not been strong enough to absorb the surplus. Battery and alloy-sector consumption remained insufficient to clear the additional metal units, pushing Shanghai Futures Exchange nickel stocks higher.

SHFE nickel inventories rose to 65,764t on 10 April from 45,544t on 9 January. This inventory build shows that imports and domestic availability are running ahead of immediate consumption.

The oversupply problem is structural in the near term. New class I capacity has continued to emerge, while demand from stainless steel, batteries and specialty alloys has not grown fast enough to rebalance the market.

The NPI conversion route is therefore unattractive. When the NPI–class I nickel spread sits below conversion cost, producers have little incentive to turn NPI into refined metal. This helps prevent additional supply from that route, but it does not immediately remove existing class I oversupply.

NPI prices have been more resilient because they are tied closely to Indonesian ore economics. Indonesian nickel ore prices remain elevated and continue to trade above the government-mandated price floor.

Concerns over tight ore availability have supported feedstock values. This has limited NPI producers’ willingness to cut prices, even though stainless steel demand remains only average.

That cost floor is important. NPI is not rising because downstream demand is exceptionally strong. It is holding because ore, mining quotas and Indonesian pricing policy are preventing a deeper fall.

The result is a distorted market structure. Class I nickel is being pulled down by inventory pressure, while NPI is being supported by feedstock costs. This explains why the spread has narrowed despite weak overall nickel sentiment.

MHP and HPAL Costs Could Rebuild the Spread Over Time

Mixed hydroxide precipitate is becoming the more important cost driver for future class I nickel production. Much of the newly added class I capacity relies on MHP feedstock rather than NPI.

Integrated producers with their own Indonesian MHP capacity have a cost advantage. Their MHP production costs are estimated at around $13,000/t in nickel metal equivalent, with conversion costs from MHP to metal at roughly $3,000/t.

This places the total cost of class I production through the MHP route at about $16,000/t. That cost base can still support production for integrated operators, but it leaves less room for producers relying on third-party MHP.

The market problem is that MHP supply is not sufficient to meet all feedstock requirements for new class I capacity. This creates competition for MHP units and limits how much low-cost refined nickel can be produced through this route.

Cost pressure is also rising across HPAL operations. Middle East tensions have tightened sulphur availability and lifted sulphur prices, which directly affects MHP producers that rely on sulphuric acid-intensive processing.

Sulphur and sulphuric acid are central to HPAL economics. Any disruption to sulphur flows can raise operating costs, reduce margins or force producers to curtail output if acid availability becomes constrained.

Indonesia’s revised nickel ore pricing formula adds another layer of pressure. The new formula is expected to have a greater impact on ore consumed by HPAL projects than on ore used by rotary kiln electric furnace operations.

This is because HPAL ore often trades closer to official pricing levels, while RKEF ore used for NPI already trades at premiums well above the benchmark. As a result, HPAL producers may feel the revised HPM framework more directly.

Higher ore prices and higher taxes could lift MHP production costs. That would eventually raise the cost floor for class I nickel produced through the MHP route, especially for integrated producers that had previously enjoyed lower feedstock costs.

This cost inflation may support class I nickel prices over time. While current oversupply is weighing on metal values, producers cannot keep adding supply indefinitely if feedstock and conversion costs rise.

NPI prices are also likely to remain anchored by costs. Indonesian ore tightness, quota uncertainty and pricing reforms should continue to support NPI even if stainless steel demand stays moderate.

As MHP costs rise and NPI prices remain cost-supported, the NPI–class I nickel spread may widen back toward the $3,500-4,000/t range over time. That would restore a more normal relationship between feedstock products and refined metal.

However, the timing depends on inventory absorption. Class I nickel prices will struggle to recover strongly until exchange stocks stop rising and downstream demand improves.

For battery supply chains, the key issue is cost pass-through. If MHP and HPAL costs rise while class I prices remain weak, margins across nickel sulphate and cathode material chains could tighten.

For stainless steel producers, NPI resilience means raw material costs may remain sticky even without strong demand. This could limit margin recovery if finished stainless prices do not rise in parallel.

The nickel market is therefore entering a complex adjustment phase. Oversupply is pushing refined metal lower, while policy, ore availability, sulphur costs and HPAL economics are raising the cost floor beneath intermediate products.

The Metalnomist Commentary

The narrowing NPI–class I nickel spread is not a sign of healthy convergence. It reflects class I oversupply on one side and cost-protected NPI on the other. The next shift will likely come from rising HPAL and MHP costs, not from a sudden recovery in nickel demand.

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.

Indonesia’s Nickel Regulations Expected to Push Up Production and Market Prices

Indonesian Nickel

HMA pricing, royalty hikes, and export holding rules may reshape costs for NPI and other nickel products.

Indonesia’s latest regulatory changes to its nickel industry could raise production costs and drive up global nickel product prices, according to market participants. The government has introduced several measures in recent months, including a new pricing benchmark, royalty revisions, and capital controls on export revenue.

In March 2024, the Ministry introduced the Harga Mineral Acuan (HMA) — a price reference model to guide nickel transactions. The government also proposed a progressive royalty rate under the Pendapatan Negara Bukan Pajak (PNBP) system, which scales with market prices. Additionally, the mandatory onshore holding period for export proceeds was extended from three months to one year, effective 1 March.

Tightened Controls and Monitoring May Reshape Nickel Economics

To improve revenue transparency, Indonesia also launched Simbara, a digital monitoring system for mineral and coal mining sectors, in July 2024. These measures aim to enhance governance and taxation but may create operational challenges for producers.

Industry sources expect these policies to raise operating and financing costs, especially for nickel pig iron (NPI) producers. Although NPI has historically been the cheapest form of nickel, ongoing regulatory pressure and tighter ore supply could reverse its oversupply status by 2025.

HMA and LME Price Link May Shrink NPI Price Gap

The new HMA pricing structure may reduce the price spread between NPI and London Metal Exchange (LME) nickel prices. Analysts believe this could alter the calculation of Harga Patokan Mineral (HPM) — the national benchmark price — resulting in higher spot and long-term prices.

Moreover, expectations that the second-half March HMA will rise alongside LME price increases indicate further cost pressures ahead, particularly for Indonesian NPI producers.

MHP and Nickel Sulphate Fuel Significant Growth in Indonesia's Nickel Exports

Indonesia has experienced a substantial increase in nickel exports during the first half of 2024, driven by a sharp rise in production capacities for mixed hydroxide precipitate (MHP) and nickel sulphate. According to research conducted by Australian bank Macquarie, Indonesia's total nickel exports reached 805,000 tonnes between January and June, reflecting a 20.7% year-on-year increase. When including stainless steel, total exports rose by 22% to 998,000 tonnes.

The growth in exports is largely attributed to the country's four high-pressure acid leach (HPAL) plants, which exported a combined 139,000 tonnes of nickel metal in the form of MHP and nickel sulphate during the first half of the year, a staggering 106% increase from the same period in 2023. The second quarter alone saw 81,000 tonnes exported. Specifically, nickel sulphate exports skyrocketed from 5,400 tonnes in the first half of 2023 to 85,400 tonnes in 2024, equivalent to 19,000 tonnes of nickel metal. Meanwhile, MHP exports grew by 80% year-on-year to 120,000 tonnes.

Nickel pig iron (NPI) remains Indonesia's largest nickel export by volume, growing by 13% year-on-year to 544,000 tonnes in the first half of 2024. However, the slower growth in NPI exports compared to MHP and nickel sulphate suggests Indonesia's increasing focus on the battery materials sector.

Despite the overall rise in exports, high-grade matte exports from Indonesia declined by 17.8% to 101,000 tonnes as more of this supply was utilized domestically for nickel metal production.

Macquarie's data also indicates that nickel ore exports increased in the second quarter of 2024, with Indonesia importing 900,000 wet metric tonnes (wmt) of nickel ore from the Philippines in June, up from 200,000 wmt in March. This increase reflects ongoing tightness in domestic supply despite the government's accelerated approval of mining quotas.

Interestingly, NPI exports to China declined in the first half of the year, with China's share of Indonesian NPI exports dropping to 74% in June, the lowest since the first quarter of 2022. Instead, more NPI is being exported to India and Europe due to cost advantages.

Additionally, Indonesian stainless steel production surged by 25% year-on-year in the first half of 2024, reversing the declines of 4% and 9% seen in 2022 and 2023, respectively.

Nickel Prices Expected to Remain Rangebound in 2025 Amid Market Shifts

Nickel

Nickel prices are projected to stabilize within the $15,000-$18,000/tonne range in 2025, driven by firm nickel ore prices but constrained by growing smelting capacity, particularly in Indonesia. While supply chain dynamics and policy changes in Indonesia could cause short-term fluctuations, the overall outlook remains rangebound.

Nickel Ore Prices: A Key Support

Nickel ore prices have remained elevated throughout 2023, with tight supply driving cif prices to $50/wmt or higher. The constrained ore supply, caused by delays in RKAB (Rencana Kerja dan Anggaran Biaya) approvals and limited mining capacity, has kept premiums high. Despite these challenges, Indonesia’s nickel ore output increased by 14% year-on-year in the first nine months of 2023, according to the International Nickel Study Group (INSG).

The Indonesian government is expected to approve additional RKAB quotas to support the growing hydrometallurgy sector, which primarily produces mixed hydroxide precipitate (MHP) for the EV market. However, uncertainty remains regarding the allocation between hydrometallurgy and pyrometallurgy, which produces nickel pig iron (NPI) and matte from higher-grade ores.

NPI Prices Anchor the Market

Indonesia remains the largest NPI producer, with NPI production costs and processing fees setting the lower bounds for Class 1 nickel prices. Rising energy and ore costs have led producers, including Nickel Industries’ Ranger Nickel project, to raise production cost estimates. In Q3 2024, cash costs reached $11,794/t, reflecting a 4.3% increase from the previous quarter.

Global Market Outlook: Balancing Surplus and Demand

The global nickel market is expected to experience a similar surplus to 2023’s 167,000 tonnes. While demand from stainless steel production is anticipated to grow by 3% in 2025, the outlook for the nickel-cobalt-manganese (NCM) battery sector is less optimistic due to the rising popularity of more affordable lithium-iron-phosphate (LFP) batteries.

China’s introduction of 200,000 t/yr of nickel capacity, relying heavily on Indonesian-produced MHP and matte, will likely shape market conditions. Although producers may face slim profit margins, some will maintain production to secure London Metal Exchange (LME) registration, ensuring liquidity and broader sales opportunities.

Indonesia’s Pivotal Role

Indonesia continues to dominate the nickel supply chain, with policies on RKAB quotas, taxes, and environmental standards closely watched by market participants. Any policy shifts could influence global supply and pricing, reinforcing Indonesia's role as a key player in the nickel market.

Europe's Reliance on Nickel Pig Iron to Persist Until CBAM's Full Implementation

ANGLO AMERICAN

Europe’s stainless steel industry will continue to rely heavily on nickel pig iron (NPI) imports until the European Union's carbon border adjustment mechanism (CBAM) enters its definitive phase in 2026. John Eastwood, head of sales for stainless and specialty steel raw materials at Anglo American, confirmed this trend during the Nickel Institute Seminar at LME Week, indicating that Europe’s current scrap shortage and rising material costs have pushed producers to depend on the cheaper, more carbon-intensive Indonesian NPI. According to Jim Lennon, managing director of Red Door Research, from January to July alone, European imports amounted to 10,000 tons of nickel metal content.

The driving factor behind the shift is the increasing cost of raw materials combined with a scarcity of stainless steel scrap in Europe. Even as scrap prices drop, Eastwood does not foresee any immediate changes. He emphasized that only CBAM, the EU's effort to limit carbon leakage, will likely curb this reliance. In its trial phase, CBAM requires European importers to account for CO2 emissions linked to imported goods by purchasing emissions certificates, further affecting the industry’s sourcing strategies.

Industry Facing a Third Year of Decline

The European stainless steel industry continues to struggle. With demand expected to shrink for a third consecutive year in 2025, many flat producers are operating far below capacity. Acerinox, a Spanish producer recovering from a five-month strike, has also committed to using NPI as feedstock. Despite the excess production capacity, profitability isn’t the issue, according to Eastwood. “The problem is excess capacity," he said. Even Acerinox’s market absence barely impacted ferro-nickel sales.

By mid-2025, Eastwood anticipates demand recovery, driven by improved macroeconomic conditions and relaxed monetary policies. However, he highlighted industry criticisms of CBAM, particularly its exclusion of scope 3 emissions and its perceived role as a protectionist policy. "There are many holes in CBAM," Eastwood noted, pointing out inconsistencies such as the inclusion of ferro-nickel but the omission of refined nickel.

Future Projections for Nickel and Freight Costs

Anglo American forecasts the class 1 nickel market to hold surpluses in the coming years, while the class 2 market, including NPI and ferro-nickel, remains balanced or tight. Eastwood predicts stable nickel prices on the London Metal Exchange (LME) through 2025, dismissing any expectations of price spikes. Additionally, high freight costs are likely to limit imports of finished stainless steel into Europe next year, further weighing on the industry.

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.

European Stainless Steel Scrap Prices Plummet

European stainless steel scrap prices have dropped significantly over the past week as sellers cut offers due to decreased interest from steelmakers. The euro's strength against the US dollar and a general softness in the ferrous market contributed to the decline, with some offers falling by up to 7%.

Declining Interest and Rising Imports

Additionally, the growing influx of nickel pig iron (NPI) from Asia has begun to impact scrap prices. Initially driven by a shortage of scrap in Western Europe, buyers have turned to NPI for cost benefits. Italian mills are noted as major NPI buyers, with significant orders reported from German and Dutch buyers. A trader predicts that these large NPI volumes will further depress scrap demand and prices, with minimal recovery expected until at least October.

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.

Merdeka Nickel Ore Production Hits Target as Downstream Expansion Gains Pace

Merdeka Battery Materials

Merdeka nickel ore production reached its 2025 target as stronger mining capacity and better weather lifted output at Sulawesi Cahaya Mineral. MBMA produced 7mn wet metric tonnes of saprolite and 14.7mn wet metric tonnes of limonite during the year. Both results rose sharply from 2024. As a result, Merdeka nickel ore production now shows that upstream growth is still supporting Indonesia’s broader nickel strategy.

The scale of the increase matters because ore supply remains the foundation of Indonesia nickel downstream expansion. Saprolite output rose 42pc year on year, while limonite output increased 45pc. The company met its saprolite target and exceeded its limonite target. Therefore, Merdeka nickel ore production is giving the group a stronger base for its processing chain.

This performance also highlights the importance of operating conditions in Indonesian mining. MBMA said optimized mining activity and lower rainfall disruption supported the result. That means the production gain did not come from capacity alone. Consequently, Merdeka nickel ore production reflects both better execution and more favorable site conditions.

Indonesia Nickel Downstream Expansion Still Shows Uneven Product Performance

Indonesia nickel downstream expansion remains the central strategic story for MBMA, but 2025 results showed a mixed product picture. The company’s downstream portfolio includes NPI, high-grade nickel matte, and mixed hydroxide precipitate. Each product line moved differently over the year. As a result, MBMA nickel output was not uniformly strong across the chain.

NPI production fell 10pc to 73,871t in nickel metal equivalent because of maintenance at the RKEF smelters. Even so, the result still landed inside the company’s guidance range. That suggests NPI operations remained resilient despite maintenance pressure. Meanwhile, high-grade nickel matte output fell much more sharply, dropping 60pc to 19,998t in nickel metal equivalent.

That matte weakness reflected a deliberate operating shift. MBMA halted HGNM production in the first quarter of 2025 and only restarted output in October after securing a new contract. Therefore, the lower HGNM result was not simply an operational failure. It also reflected a commercial reset inside the product mix.

HPAL Nickel Growth Is Becoming More Important for MBMA’s Next Phase

HPAL nickel growth is now becoming the most important part of MBMA’s medium-term outlook. The PT ESG HPAL plant, operated with Green Eco-Manufacture, produced 25,994t of nickel in MHP in 2025. That gives the company a stronger foothold in battery-linked nickel chemicals. Consequently, Indonesia nickel downstream expansion is moving deeper into higher-value processing.

The next growth driver is already under construction. The Sulawesi Nickel Cobalt HPAL project is expected to start commissioning in the second half of this year. With capacity of 90,000 t/yr of nickel in MHP, the project could materially change MBMA’s downstream profile. Therefore, HPAL nickel growth may become the main reason investors watch MBMA more closely in 2026.

The company’s new guidance supports that view. MBMA raised its 2026 ore production targets for both saprolite and limonite, while also lifting its HGNM target sharply. MHP output from PT ESG is also expected to rise. As a result, Merdeka nickel ore production is no longer just an upstream success story. It is increasingly the feed base for a much broader downstream buildout.

The Metalnomist Commentary

MBMA’s 2025 result shows that Indonesia’s nickel model still depends on strong ore delivery before downstream value can scale. The real takeaway is not just that ore targets were met. It is that HPAL and chemical capacity are becoming more central to the company’s future than traditional nickel products alone.

Europe Faces Deindustrialization Crisis Amidst Unfair Competition and Policy Struggles

Aperam

Europe’s stainless steel industry is at a critical crossroads, facing existential challenges due to high raw material costs and increasing competition from Asian producers. According to Timoteo di Maulo, CEO of Aperam, the European sector is particularly vulnerable due to its reliance on more expensive, environmentally-friendly processes, while Asian producers benefit from cheaper, carbon-intensive nickel pig iron (NPI). Speaking at the SMR International and Special Steels Conference in Rome, di Maulo warned, “Europe will die if it cannot create a level playing field,” likening the current situation to playing European football against American football, a game neither possible nor fair.

Stainless Steel Demand Decline and Unequal Standards

Market data from SMR revealed that real stainless steel demand in Europe is expected to fall by 6% in 2024, following a decline of 3% in 2022 and 8% in 2023. The gap in production methods between Europe and Asian competitors is widening, as Indian and Chinese producers are not required to use high scrap ratios, giving them a distinct cost advantage. European steelmakers, driven by stringent EU decarbonization policies, are forced to use higher-priced scrap, further straining the industry's competitiveness.

Di Maulo emphasized that while both Europe and Asia rely on ferro-nickel and NPI, European producers face additional financial burdens that threaten the industry’s long-term viability. The decarbonization measures that Europe imposes on its steelmakers are not mirrored in Asia, where efforts to reduce carbon emissions fall short of European standards.

The situation is compounded by the upcoming European Carbon Border Adjustment Mechanism (CBAM), set to take effect in 2026. Di Maulo described CBAM as an experimental policy that risks accelerating deindustrialization by limiting raw material imports while incentivizing the import of finished goods. Other industry leaders echoed these concerns, warning that CBAM, conceived as a tax but transformed into a green policy tool, is impractical and will further weaken Europe's position in global trade.

Industry Leaders Call for Pragmatic Solutions

At the same conference, Indian producer Jindal Stainless highlighted India’s dependence on NPI due to rapid industrial growth and a shortage of scrap metal. Ratan Jindal, chairman of the company, pointed out that proposed restrictions on scrap imports, such as the EU Waste Shipment Regulation, will only exacerbate this issue.

The consensus among European stainless steel executives is that CBAM, as it currently stands, is deeply flawed. Spanish producer Acerinox’s CEO, Bernardo Velazquez, stressed the difficulty of applying CBAM uniformly across Europe due to differing national tax systems. Italian steelmaker Marcegaglia’s CEO, Antonio Marcegaglia, criticized CBAM for being limited to early stages of the production cycle and for failing to address the broader economic realities of the stainless steel industry. Dimitri Menecali of Arvedi AST added that without addressing Scope 3 emissions—those created further down the supply chain—CBAM would not effectively promote sustainability.

The industry is calling for more coordinated policies and international alliances to ensure Europe's stainless steel sector remains competitive. As di Maulo stated, “There is a role for industrialization in Europe, in innovation, high performance, and service-oriented materials.”

Nickel Industries Indonesian Output Shows Ore Pressure Despite HPAL Growth

Nickel Industries, Indonesian

Nickel Industries Indonesian output was mixed in the first quarter as lower mining volumes and declining nickel grades contrasted with higher nickel pig iron and mixed hydroxide precipitate production. The Australia-based producer reported weaker ore output but stronger downstream processing across its Indonesian RKEF and HPAL assets.

Nickel Industries Indonesian output reflects the increasingly complex operating environment for nickel producers in Indonesia. Mining permits, ore grades, sulphur availability and downstream ramp-up timing are all shaping production performance.

Nickel Industries Indonesian output also shows why Indonesia’s nickel market can no longer be viewed only through capacity additions. Feedstock access and ore quality are becoming just as important as new processing plants.

Total nickel ore production fell by 30% from a year earlier to 3.96mn wet metric tonnes in January-March. However, output almost tripled from the previous quarter after mining activity recovered from RKAB quota delays late last year.

RKAB Quota Recovery Supports Ore Flow but Grades Weaken

Nickel Industries received 14.3mn wmt of 2026 RKAB nickel ore quota this year. This was 36% higher than its total approved quota of 10.5mn wmt in 2025.

The higher quota helped production recover from the December quarter, when mining was disrupted by RKAB delays. The company also plans to apply for additional RKAB quotas later this year.

The Hengjaya mine supplies ore to Nickel Industries’ RKEF and HPAL plants. These facilities produce nickel pig iron for stainless steel markets and mixed hydroxide precipitate for battery material supply chains.

Total NPI output from the Hengjaya, Ranger, Oracle and Angel RKEF operations rose by 4.4% year on year and 1.7% quarter on quarter to 274,086t.

However, nickel-contained production fell to 30,264t because the average nickel content of NPI dropped to 11% from 12.1% a year earlier. This is a critical signal for margins because lower grades reduce metal output even when furnace volumes rise.

The result shows how Indonesian nickel producers face a tightening relationship between ore availability and processing efficiency. Higher RKEF output does not automatically mean stronger nickel production if feedstock grades weaken.

HPAL Growth Continues as ENC Start-Up Moves to Second Quarter

Nickel Industries’ Huayue Nickel Cobalt HPAL project produced 21,526t of nickel and 2,370t of cobalt in MHP form during the first quarter. Nickel output rose by 1.7% from a year earlier, while cobalt output increased by 23%.

This growth strengthens Nickel Industries’ exposure to battery materials. MHP remains a key intermediate product for nickel sulphate and other battery chemical supply chains.

The company’s next major step is the Excelsior Nickel Cobalt HPAL project. Commissioning has been delayed to the second quarter, with full ramp-up targeted by the end of October.

ENC had previously been expected to start commissioning in the first quarter. The delay matters because HPAL projects are technically complex and depend on stable feedstock, acid supply, utilities and commissioning discipline.

Nickel Industries said it has enough sulphur inventory to support ENC’s ramp-up until the third quarter. The company previously bought sulphur at an average price of $450/t.

Sulphur availability is now a strategic issue for HPAL producers. Any disruption in sulphur or sulphuric acid supply can raise costs and slow production growth across Indonesia’s battery nickel chain.

The company also plans to list nickel cathode produced at ENC on both the London Metal Exchange and Shanghai Futures Exchange. Exchange approval would support market acceptance and improve the project’s commercial flexibility.

Nickel Industries increased its stake in ENC by 2% for $46mn on 1 April, lifting its interest to 46% and making it the project’s largest shareholder. This gives the company greater exposure to Indonesia’s move from NPI and MHP toward Class I nickel products.

The broader implication is clear. Nickel Industries is moving across the Indonesian nickel value chain, from ore mining and RKEF production into HPAL, MHP and exchange-deliverable cathode.

The Metalnomist Commentary

Nickel Industries’ quarter shows that Indonesia’s nickel growth is becoming more constrained by ore quality, RKAB permits and sulphur logistics. Capacity still matters, but the winners will be producers that control feedstock, manage HPAL complexity and secure recognised Class I nickel routes.

Merdeka Battery Materials Sees Surge in Nickel Output for 1H 2024

Merdeka Battery Materials

Merdeka Battery Materials (MBMA), an Indonesian nickel producer, reported a significant increase in its production during the first half of 2024. The company more than doubled its output compared to the same period last year, driven by strategic expansions and enhancements in infrastructure at its Sulawesi Cahaya Mineral (SCM) mine. This growth reflects MBMA’s ongoing efforts to meet rising global demand for nickel, particularly as it prepares for increased production in the coming years.

Expansion and Strategic Adjustments Boost Output

From January to June 2024, MBMA produced 3.93 million wet metric tonnes (wmt) of material at the SCM mine, with 3 million wmt of limonite ore and 0.93 million wmt of saprolite ore. The rise in production was facilitated by stronger-than-expected demand for limonite, which is anticipated to grow further in 2025. To support this trend, MBMA engaged more mining contractors during the first half of the year, allowing it to scale up its mining activities efficiently.

Despite these gains, MBMA has slightly adjusted its production targets for 2024. The company revised its limonite ore guidance downward to 9.5-10.5 million wmt from the previous forecast of 10-11 million wmt. However, it expects output to recover and increase in 2025, following the mid-year commissioning of a second feed preparation plant at SCM. Meanwhile, the production guidance for saprolite ore remained steady at 4-5 million wmt, reflecting consistent demand and operational stability.

The SCM mine plays a crucial role in MBMA’s supply chain, providing saprolite ore for its rotary kiln electric furnaces (RKEF) to produce nickel pig iron (NPI) and supplying limonite ore to the Huayue Nickel Cobalt high-pressure acid leaching (HPAL) plants. Additionally, MBMA plans to begin delivering limonite ore to PT ESG New Energy Material and PT Meiming New Energy Material once their new feed preparation plants are operational by mid-2025.

During the first half of 2024, MBMA’s RKEF smelters produced 42,782 tonnes of nickel in NPI, doubling from 21,238 tonnes in the same period of 2023. Matte production surged even more impressively, more than quintupling to 25,443 tonnes. These robust results underscore MBMA’s expanding capabilities and strategic investments in infrastructure and production processes.

Looking ahead, the company has maintained its production guidance for matte at 50,000-55,000 tonnes of nickel for 2024. However, it has slightly lowered its NPI target to 80,000-85,000 tonnes from the previous range of 85,000-92,000 tonnes. This adjustment accounts for planned relining works scheduled at one of the smelters in September, which are expected to temporarily impact production levels.

BSE On-Spec MHP Output Marks a New Step in Indonesia’s Nickel Battery Chain

Harum Energy

BSE on-spec MHP output marks an important commissioning milestone for Indonesia’s battery materials industry. Blue Sparking Energy has now produced qualified mixed hydroxide precipitate at its HPAL plant in Weda Bay Industrial Park. That confirms the project has moved beyond early trial production into a more advanced operating stage. As a result, BSE on-spec MHP output strengthens confidence in another major Indonesian downstream nickel asset.

This matters because MHP remains a critical intermediate product for the battery supply chain. BSE’s plant has nameplate capacity of 67,000 t/yr of nickel in MHP and 7,500 t/yr of cobalt. Those are meaningful volumes for a project that only began trial production in late November 2025. Therefore, BSE on-spec MHP output signals that new capacity in Indonesia is still moving forward despite a crowded nickel market.

The achievement also matters at the industrial park level. BSE is now the second MHP producer operating in IWIP after Huafei. That adds another layer of downstream conversion inside one of Indonesia’s most important nickel processing hubs. Consequently, Weda Bay MHP production is gaining more depth and scale.

Indonesia HPAL Plant Commissioning Is Advancing Toward Stable Operations

The Indonesia HPAL plant operated by BSE now appears closer to commercial readiness. Producing on-spec material is one of the most important steps in any HPAL commissioning cycle. It shows the process can deliver product quality that meets market requirements. Therefore, the milestone matters more than a simple trial output update.

HPAL projects are rarely judged only by design capacity. They are judged by whether they can ramp safely, consistently, and within product specification. BSE began construction in late December 2023 and initially targeted early 2026 for commercial operations. As a result, this update suggests the plant is moving broadly in line with that schedule.

This progress also reinforces Indonesia’s commitment to downstream nickel conversion. The country has built strong momentum in NPI, matte, and now MHP capacity. However, each new HPAL success still matters because technical execution remains difficult. Therefore, BSE on-spec MHP output is a useful operating signal for the wider market.

Weda Bay MHP Production Supports Harum’s Broader Downstream Strategy

Weda Bay MHP production also fits clearly into Harum Energy’s broader portfolio strategy. Harum already controls downstream assets through subsidiaries producing NPI and nickel matte. Adding qualified MHP output gives the group stronger exposure across multiple processing routes. Consequently, the company is building a more diversified nickel conversion platform.

That portfolio approach matters in the current market. Different nickel products serve different end markets, from stainless steel to battery chemicals. A producer with exposure to NPI, matte, and MHP can respond more flexibly to changing demand and pricing conditions. Therefore, BSE on-spec MHP output strengthens Harum’s strategic position, even in an oversupplied nickel environment.

The timing is also notable because more Indonesian battery-materials capacity is still coming. Harum also holds a stake in Nickel Industries, whose ENC project is preparing to add more nickel units through MHP, sulphate, and cathode production. As a result, BSE’s milestone is part of a broader wave of Indonesian downstream growth rather than a standalone event.

The Metalnomist Commentary

This milestone is important because it shows Indonesia’s nickel chain is still expanding deeper into battery materials. The real question now is not whether new HPAL projects can start. It is whether the market can absorb all this qualified downstream supply without further margin pressure.

Eramet Weda Bay Nickel Faces Care and Maintenance Risk as RKAB Quota Tightens

Eramet - Nickel

Eramet Weda Bay nickel operations face a potential care and maintenance move in May after Indonesia approved a sharply reduced 2026 nickel ore quota. The French mining group said PT Weda Bay Nickel received an initial RKAB permit covering only 12mn wet metric tonnes of nickel ore production and sales.

The Eramet Weda Bay nickel quota is more than 70% below last year’s authorised level. PT WBN initially received 32mn wmt in 2025, later revised up to 42mn wmt.

Eramet has requested an upward revision to the 2026 permit. The company said the current quota will be exhausted by the middle of next month, making the permit decision the most important near-term issue for its nickel business.

The initial 12mn wmt permit includes 3mn wmt for internal use. This leaves Eramet’s external sales target at only 9mn wmt for 2026, well below the level implied by the mine’s operating capacity.

Indonesia’s RKAB Limits Threaten Ore Supply and NPI Continuity

PT Weda Bay Nickel is preparing to enter care and maintenance if the quota is not increased. Eramet said its nickel pig iron plant will continue operating using ore stocks, but the mining restriction creates clear supply risk.

The permit issue matters because Weda Bay is a key ore supplier inside Indonesia’s nickel ecosystem. Its saprolite ore supports nickel pig iron and stainless steel production, while limonite ore feeds high-pressure acid leach plants producing battery intermediates.

PT WBN delivered strong first-quarter output before the quota risk escalated. Marketable nickel ore production rose by 10% on the year to 10mn wmt.

External ore sales climbed by 54% to 8.3mn wmt. Saprolite sales increased by 27% to 4.8mn wmt, while limonite sales jumped by 118% to 3.6mn wmt.

The limonite increase was driven by stronger demand from HPAL plants at the Indonesia Weda Bay Industrial Park. Internal ore consumption for Eramet’s NPI plant was 1mn wmt during the quarter.

Strong sales partly reflected a weak comparison with early 2025, when IWIP plants were destocking after ending 2024 with high inventories. Still, the result shows that downstream demand remains firm.

PT WBN also continued to benefit from premiums of more than 100% above Indonesia’s benchmark floor price for high-grade saprolite. This reflected tight domestic ore supply and stronger competition for available material.

Nickel Market Rebalancing Depends on Permits, Sulphur and Ore Costs

Eramet’s nickel ferro-alloy production was broadly stable in the first quarter. Output reached 9,000t of nickel, down only 1% from a year earlier.

Adjusted nickel turnover, excluding New Caledonia’s Societe Le Nickel, rose by 43% to €163mn. Eramet’s share of PT WBN turnover, excluding its offtake contract, increased by 59% to €116mn.

The company said first-quarter market conditions were supportive. The average London Metal Exchange nickel price rose by 12% on the year to $17,362/t, driven partly by uncertainty over Indonesian ore supply.

Global primary nickel demand rose by 3% to 900,000t in the first quarter. Stainless steel, batteries and aerospace supported consumption.

Global primary nickel production fell by 3%, although the market remained in a modest surplus. Eramet said the nickel market could gradually rebalance over the rest of the year.

Restricted Indonesian mine permits are one reason. Sulphur supply problems are another, because they are raising costs for HPAL producers that depend on sulphuric acid or sulphur feedstock.

PT WBN’s production costs are expected to rise from 2025 levels. Eramet cited authorised volume limits, mining plan adjustments and higher fuel prices.

Indonesia’s revised mineral benchmark formula could also reshape ore economics. The formula, effective from mid-April, now includes cobalt and other contained metals in ore valuation.

This change could increase costs for HPAL feedstock and alter the economics of limonite supply. It also strengthens the government’s ability to capture more value from contained metals in nickel ore.

For Eramet Weda Bay nickel operations, the quota decision will determine whether strong first-quarter performance can continue. Without a higher RKAB, the mine faces a sudden operating constraint despite firm downstream demand.

The Metalnomist Commentary

Eramet Weda Bay nickel is becoming a test case for Indonesia’s tighter control over ore supply. If the RKAB quota is not revised, the impact will reach beyond one mine and reinforce cost pressure across NPI, HPAL and battery-linked nickel supply chains.

Global Nickel Surplus to Persist as Indonesia Expands

Nickel

Global Nickel Surplus will persist through the decade as Indonesian supply keeps growing. The outlook points to sustained price pressure and rising LME stocks. As a result, Global Nickel Surplus remains the base case for traders and producers.

Indonesia’s dominance keeps prices capped

Indonesia now anchors world output and extends capacity again. Producers there add HPAL, matte, and MHP lines to push Class 1 units. Meanwhile, NPI still supplies most global nickel, compressing the NPI discount to LME metal. Therefore, Global Nickel Surplus endures even after closures elsewhere. Many non-Indonesian assets stay cash-negative near $15,000/t.

Stocks swell while battery demand underperforms

LME inventories rise as Indonesia and China refine more metal. Chinese net imports and strategic stockpiles also climb. However, EV batteries shift toward LFP and away from high-nickel chemistries. Stainless steel demand holds up at low prices, but not enough to balance the market. Consequently, Global Nickel Surplus widens despite stainless resilience.

Policy risks grow inside Indonesia. Authorities review permits, fine operators, and tighten ore controls. Ore grades trend lower, lifting costs and threatening margins. Even so, installed capacity already exceeds three million tonnes a year. Therefore, any near-term permitting delays may only slow, not stop, supply growth.

Producers pivot, recycle, and hedge

Producers cut ex-Indonesia capacity yet fail to rebalance supply. Western buyers lean on recycling, but Asia’s recycling rates lag. Traders hedge around a firm $15,000/t floor and watch spreads. OEMs diversify alloys and manage exposure to Class 1 premiums.

The Metalnomist Commentary

Watch Indonesia’s permitting cadence and HPAL ramp curves. A genuine bull case needs slower Indonesian growth or a clear swing back to nickel-rich batteries. Until then, expect range-bound prices, elevated inventories, and selective shutdowns outside Indonesia.

Nickel Royalty Reforms Reflect Indonesia's Commitment to Resource Preservation

Nickel indonesia

Focus Keyphrase: Indonesia nickel royalty controls

Indonesia has reaffirmed its commitment to nickel royalty controls by increasing royalty rates and introducing new output restrictions. The changes aim to preserve Indonesia's nickel reserves and stabilize global prices.

Indonesia Tightens Control Over Nickel Output and Royalties

In March 2025, Indonesia adopted Regulation 19 to revise nickel royalty rates. The new structure raises ore royalties from 10% to 14–19%. It also introduces royalty rates of 5–7% for ferronickel and NPI and 3.5–5.5% for nickel matte. These changes, effective end of April, reflect a strategy to balance export earnings with long-term resource conservation.

According to Cecep Mochammad Yasin from the energy and mineral resources ministry, the adjustment aims to secure greater economic returns and reduce overexploitation. He stressed the need to protect nickel reserves for future generations, emphasizing the risks of rapid depletion.

Global Coordination and Downstream Development

Indonesia has cut its 2025 nickel production quota to 200mn t, down from 215mn t in 2024. This move follows a global oversupply that pushed LME nickel prices to a low of $14,000/t in early April. Prices later rebounded to $15,000/t amid ongoing trade talks.

Cecep hinted at possible collaboration with other nickel-producing nations to better manage global supply. Officials also warned of declining ore quality, which could challenge future production, particularly in nickel pig iron (NPI).

Meanwhile, Indonesia is accelerating its downstream strategy. Plans include boosting stainless steel, battery raw material, and EV component production. Under the Indonesia Emas 2045 roadmap, the country seeks to invest over $600bn in commodity-linked industries to escape the "middle-income trap."

The Metalnomist Commentary

Indonesia's nickel royalty reforms mark a major shift in global resource governance. By tightening output and encouraging downstream investments, Indonesia is moving from a raw exporter to a value-added production hub. These efforts could significantly influence global nickel pricing and supply chain dynamics.

Indonesia’s VDNI Nickel Output Rises but Losses Persist in 2024

Indonesia’s VDNI

Higher Nickel Production Fails to Offset Heavy Losses

Indonesia’s Virtue Dragon Nickel Industry (VDNI) increased nickel pig iron (NPI) output in 2024 but still posted significant losses. The company, controlled by China’s Jiangsu Delong Nickel Industry, produced 675,300 tonnes of NPI, a 2.1% rise from 2023. However, VDNI reported operating revenue of ¥6.56bn ($910mn) and a net loss of ¥1.61bn ($224mn).

The losses stemmed largely from an impairment linked to accounts receivable from Jiangsu Delong. The group’s stainless steel plant filed for bankruptcy in 2024, compounding financial pressures. Additionally, currency depreciations in both the Indonesian rupiah and Chinese yuan weighed heavily on VDNI’s results.

Outlook for Recovery in 2025

Despite financial setbacks, VDNI expects profitability to rebound in 2025. The company highlighted improvements in operational performance and plant utilization during 2024. With a nameplate capacity of 100,000 tonnes per year in nickel metal equivalent, VDNI remains a key producer within Indonesia’s fast-expanding nickel sector.

Delong’s control of multiple assets, including Gunbuster Nickel Industry, strengthens its footprint in Sulawesi’s nickel belt. However, challenges such as fluctuating currency values and the aftershocks of Delong’s financial troubles remain significant risks.

The Metalnomist Commentary

VDNI’s case underscores the fragile balance between production growth and financial stability in Indonesia’s nickel sector. Rising output alone cannot shield producers from external shocks such as currency depreciation or parent-company bankruptcies. The industry’s resilience in 2025 will depend on stabilizing financial structures alongside continued production expansion.

Record Highs in China's Ferro-Nickel Imports Amid Booming Stainless Steel Industry in 2024

Ferro-Nickel

Surging Demand Drives Unprecedented Import Volumes

In 2024, China's ferro-nickel imports reached a new record, driven by robust demand from its stainless steel mills and alloy producers, particularly those with operations in Indonesia. The total import volume surged to 8.98 million tons, marking a 6.2% increase from the previous year. A significant portion of these imports, amounting to 8.67 million tons, came from Indonesia, reflecting a 9.5% rise over the period.

Indonesian Production Boom Fuels Export Growth

The surge in imports from Indonesia is attributed to new production capacities at companies like Lygend, Nadesico Nickel Industry (NNI), and Shuoshi. These firms have effectively compensated for reduced shipments from other countries such as New Caledonia, Colombia, and Brazil, which saw declines in their export volumes to China by 27%, 0.9%, and 36% respectively.

Strategic Expansion and Technological Advancements in Nickel Production

The expansion in Indonesia includes significant developments like Shuoshi's commissioning of 12 Rotary Kiln Electric Furnaces (RKEF) and NNI's ongoing project, which involves six of eight planned RKEF lines. Moreover, Ningbo Lygend's nickel pig iron (NPI) project showcases substantial production, with its subsidiary HJF already at full capacity since August 2023, and its second phase under construction aiming for completion by 2026. NPI, with its high nickel content, remains crucial for stainless steel manufacturing, underscoring the strategic importance of these expansions.