LME nickel price fluctuations caused by Indonesia nickel product costs

30,Mar 2022

The current LME nickel price abnormal volatility, not only caused a temporary stagnation of the spot market, but also led to a sharp rise in the benchmark price of nickel ore trade in Indonesia.

Firstly , The LME nickel price is used as the base pricing for nickel ore traded in Indonesia

Indonesia, the world’s largest nickel producer, is different from other countries in that it once again banned exports of the metal in 2020, which is mainly used by the local stainless steel and alternative energy industries. Indonesia’s nickel consumption is expected to increase by 20-30% to 100 million wet tonnes in 2022 as new nickel projects come on stream.

Indonesia in 2020, after the second banning nickel exports in order to attract foreign investment in domestic refining industry and promote the development of smelting, according to the energy and mineral resources minister/ordinance no. 2020, 11 holding metals mineral production and operation of the mining license and metal mineral production special mining license produce nickel, nickel mines in sales of, Must refer to HPM.

The benchmark price of Indonesian nickel ore HPM=Ni%*CF (correction coefficient) * (1-moisture) *HMA (reference price), and HMA is the average price of the first two months of the London Exchange LME, so the rise and fall of LME nickel price has a direct impact on the price of Indonesian nickel ore.

Second, LME price fluctuation led to the price of Indonesian nickel ore skyrocketed and the cost of downstream nickel iron increased significantly

In the benchmark nickel price of March 2022, nickel ore with nickel content of 1.80% and 35% water content (MC) was priced at $52.32 / wet ton, up nearly $12 / wet ton, or 30%, compared with 2021.

Indonesia not only plays an important role in the production of nickel resources, but also has the lowest cost of primary nickel in the world. The increase of the price of nickel ore in Indonesia will represent the overall upward shift of the marginal cost of primary nickel in the world.

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