- Indonesia’s mining approval process lags, tightening supply
- Potential hike in benchmark price may further support market
Nickel prices on the London Metal Exchange (LME) strengthened in the week ended 27 March, with the three-month contract closing at $17,210/t, up from $16,475/t in the previous week. The uptick was driven by geopolitical tensions and concerns over tighter supply following Indonesia’s move to consider export taxes on nickel and coal. LME inventories remained largely stable at 282,240 t compared with 283,770 t in the previous week, indicating balanced market conditions.
Indonesian policy uncertainty supports ore market
Indonesia’s nickel ore market remained firm, supported by delayed RKAB (Mining Work Plan and Budget) approvals and expectations of tighter regulatory controls. Slower approval progress during the holiday period and uncertainty around quota allocations constrained near-term supply, particularly for high-grade ore.
Miners maintained cautious selling strategies, while smelters continued active restocking to secure raw material, reflecting concerns over supply continuity. Ongoing discussions around export taxation and a potential increase in the nickel benchmark price (HPM) are expected to further support ore market sentiment.
Around 150 mnt of nickel mining quotas have been approved so far, signalling gradual progress in supply pipeline development despite regulatory uncertainty.
Indonesia mulls export tax on processed nickel
Indonesia is evaluating export taxes on processed nickel products, including nickel pig iron, ferronickel, matte, and MHP from April, aiming to enhance state revenue. However, the implementation of windfall taxes has been delayed beyond the initial April timeline, indicating ongoing policy deliberations.
Philippines: Improved weather eases nickel ore supply tightness
Nickel ore market sentiment in the Philippines softened this week as improved weather conditions marked the end of the rainy season, enabling a gradual recovery in mining operations and supply availability. Key mining regions resumed activity, increasing cargo availability in the spot market.
However, buying interest remained cautious, with downstream smelters showing limited appetite amid stable demand conditions, indicating a softer near-term outlook for ore market sentiment.
Outlook
Nickel prices are expected to remain supported next week, underpinned by Indonesia’s evolving policy landscape and constrained ore availability. However, improving supply from the Philippines and cautious downstream demand may limit sharp upside.
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