Indonesian nickel ore prices rise on tight supply

Market: Metals
09/06/25

Tighter supply of domestically mined nickel ore in Indonesia has lifted premiums for ore in the country, prompting a switch in mining firm's sales approach and forcing nickel products producers to seek more imported ore.

Prices in Indonesia for nickel ore with 1.6pc nickel content and 35pc moisture rose to about $53/wet metric tonne (wmt) cif main production hub in May, rising further from the $44/wmt in January, mostly driven by a stronger premium.

The Indonesian government sets the HMA, which is the official guide price and acts as a government-mandated price floor. A premium is then added to it, typically when supply is tight.

Premiums for nickel ore in Indonesia rose to $25/wmt in May from $16/wmt in January in response to tighter availability caused by rainy weather on Sulawesi Island since November 2024. Sulawesi holds about 70pc of Indonesia's total nickel ore resources. The rainy season on the island typically spans November-March but it has been extended in 2025. The wet weather has caused disruptions to operations in Morowali Industrial Park on the island in March-April.

Supply is set to become even tighter as the government ordered state-owned firm PT Aneka Tambang (Antam) to suspend operations at a nickel mine in the Raja Ampat archipelago in West Papua because the region is a marine protected area and internationally renowned among divers for its coral reefs and biodiversity. The site produces high-grade nickel and has a quota to mine up to 3mn wmt/yr.

The increased tightness in nickel ore availability has prompted mining firms to sell ore through tenders instead of bilateral negotiations in the past few months. And ore buyers are now offering $1-2/wmt higher for purchases more than 100,000wmt in an attempt to stimulate sellers to accept larger orders so they can secure more ore for future needs, which is in contrary to common expectations, a trading house said.

Downstream prices fall

The rise in nickel ore prices comes despite a fall in downstream products' prices. Stainless steel 304 cold-rolled coils prices in China fell to 13,250 yuan/t ($1,844/t) in May from Yn13,650/t in March, while Indonesia's nickel pig iron (NPI) export prices dropped to $116/metric tonne unit (mtu) on 6 June from $124.50/mtu on 21 March. The fall in NPI and stainless steel prices were mostly driven by the ongoing US-China trade disputes. NPI is a major nickel feedstock for 304 stainless steel in China.

The diverge in upstream and downstream nickel unit prices is because the Indonesian nickel ore market has been a seller's market since 2023, when the growth in nickel ore supply began to lag behind the increase in nickel products capacity on the back of delays in issuing mining quotas and heavy rains disrupting local mining operations. Indonesia's nickel products output in the form of NPI, ferronickel, mixed hydroxide precipitate and matte is expected to increase to 2.49mn t in nickel metal equivalent in 2025 from 1.83mn t in 2023, meaning that ore demand is expected to rise to 280mn wmt from 200mn wmt in the same period.

A lack of domestically mined ore has driven Indonesian NPI and other nickel intermediates producers to seek seaborne ore. Indonesia has been buying nickel ore from the Philippines since mid-2023. Imported volumes have rapidly grown in subsequent months, rising to nearly 10mn t in 2024, which is about 130,000t in nickel metal equivalent and accounted for around 6pc of total demand.

Imports are expected to rise further in 2025. Shipments in January-April totalled over 2.6mn t, already exceeding the 2.34mn t imported in January-June 2024.

Indonesian nickel producers require ore from the Philippines to blend with local ore to form a suitable silicon and magnesium ratio, further supporting imports from the country. This is largely because the specification of Indonesian-origin nickel ore has changed after 15 years of rapid mining, and there are different requirements for ore types and specifications used in rotary kiln electric furnaces (RKEF) and high-pressure acid leaching (HPAL) processes.

Prices of nickel ore, NPI, stainless steel

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