- Corrective factor for ≤1.2% Ni limonite lowered to 14% from 26%
- Revision aims to align government benchmark with actual market prices
The Indonesian government has revised its nickel ore benchmark pricing formula (HPM), lowering the price reflection rate for low-grade limonite ore containing 1.2% nickel or less. The corrective factor for this grade has been reduced to 14% from 26%, marking the first adjustment since the significant HPM reform introduced in April 2026.
The revision was issued by Indonesia’s Ministry of Energy and Mineral Resources through Ministerial Decision No. 363.K/MB.01/MEM.B/2026 dated September 11, 2026.
The latest move primarily affects low-grade limonite used as feedstock for high-pressure acid leach (HPAL) operations and is aimed at narrowing the gap between government-calculated HPM values and actual market transaction prices.
Low-grade limonite formula revised
Indonesia significantly revamped its nickel ore HPM formula in April, incorporating the value of associated minerals such as iron, cobalt and chromium into the pricing mechanism. The change resulted in a sharp increase in the benchmark price of low-grade nickel ore.
Under the April formula, the corrective factor for 1.6% Ni ore was set at 30%, with the rate declining by one percentage point for every 0.1 percentage-point reduction in nickel content. This resulted in a corrective factor of 26% for 1.2% Ni ore.
The September revision introduces a separate pricing structure for ore containing 1.2% Ni or less. The corrective factor has been reduced to 14% for 1.2% Ni ore, with further reductions for lower nickel grades.
This represents a 12-percentage-point reduction, or approximately 46% on a relative basis, in the international nickel price component reflected in the HPM calculation.
HPM and HMA: What is the difference?
Indonesia’s HMA (Harga Mineral Acuan) represents the government’s benchmark/reference price for nickel metal, which moves in line with international nickel market indicators.
Meanwhile, HPM (Harga Patokan Mineral) is the benchmark selling price for nickel ore at the mine.
Since nickel ore contains several components, including nickel, iron, cobalt, chromium and moisture, the government uses the HMA along with these parameters to calculate the final HPM.
The corrective factor determines how much of the international nickel benchmark is reflected in the ore price.
HPM surge created gap with spot market
The latest adjustment follows a sharp increase in low-grade ore prices after the April reform.
The HPM for 1.2% Ni ore increased from around $16/t before the April revision to approximately $40/t immediately after the change. With subsequent increases in nickel reference prices, the formula-based value moved into the mid-to-high $40s/t.
However, actual market prices for low-grade limonite remained below the government benchmark, widening the gap between HPM and spot transaction values.
The higher benchmark also increased raw-material costs for HPAL smelters, which use low-grade limonite to produce nickel intermediates such as mixed hydroxide precipitate (MHP).
The September revision is therefore expected to reduce the ore procurement burden for HPAL operators and bring the benchmark closer to prevailing market conditions.
Limited impact on stainless steel raw materials
The direct impact on the stainless steel supply chain is expected to be more limited.
High-grade saprolite ore, which is primarily used to produce nickel pig iron (NPI) for stainless steel production, was largely outside the scope of the latest adjustment.
The existing corrective-factor structure for higher-grade ore remains in place, including:
1.6% Ni: 30%
1.5% Ni: 29%
1.4% Ni: 28%
1.3% Ni: 27%
As a result, the latest revision should not be interpreted as a broad reduction in Indonesian nickel ore prices.
Battery nickel and stainless steel markets diverge
The adjustment effectively creates a greater distinction between low-grade limonite used in the battery nickel supply chain and high-grade saprolite used for NPI and stainless steel production.
For HPAL operators, lower HPM values could reduce ore procurement costs and provide some relief to MHP production economics.
For stainless steel producers, however, the unchanged high-grade saprolite formula means the direct cost impact on NPI production is expected to remain limited.
Consequently, the latest HPM adjustment is unlikely to act as a significant downward factor for Indonesian NPI or global stainless steel prices in the near term.
Outlook
The September revision can be viewed as a follow-up adjustment to April’s HPM reform. While the April changes substantially increased the value assigned to low-grade limonite, the latest move reduces the benchmark after formula-based prices moved significantly above actual market levels.
The key development is Indonesia’s move towards separating the pricing dynamics of battery-grade limonite and stainless-steel-grade saprolite.
For the stainless steel market, the high-grade saprolite pricing structure remains unchanged. Therefore, market participants are likely to continue focusing on NPI availability, Indonesian ore quotas, nickel prices and stainless steel demand rather than treating the latest HPM revision as a broad-based reduction in nickel raw-material costs.
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