- Weda Bay NPI output faces further reduction
- Aluminium project diverts power from nickel operations
Global nickel prices strengthened in the week ended 20 May following fresh concerns over tightening nickel pig iron (NPI) supply from Indonesia, the world’s largest nickel producer.
LME nickel futures briefly touched $19,165/t on 19 May before settling at $18,806/t, supported by reports that 10-15% of high-grade NPI production capacity at Indonesia’s Weda Bay Industrial Park may undergo rotational maintenance in the coming months.
Market participants highlighted that the major development impacting the market is the expected decline in Indonesian NPI output due to power allocation changes. Electricity from the industrial park is reportedly being diverted towards a new aluminium smelting project scheduled to start operations in June, restricting utilisation rates at existing nickel smelters.
Industry sources indicated that Indonesian NPI operations have already been running at reduced levels since March-April amid tightening ore availability, declining ore grades, and elevated production costs. Monthly NPI output at the affected park is expected to decline by nearly 3,000 t.
At the same time, Indonesia’s tightening RKAB approvals, reduced ore mining quotas, and elevated ore prices continue to pressure smelter margins and support firm nickel sentiment globally.
Market participants noted that despite expectations of marginal production increases from some Chinese and Indonesian producers, overall NPI supply across the region is expected to remain tight in the near term, keeping stainless steel raw material costs elevated.
Leave a Reply