Indonesian Nickel Supply May Increase, Easing Asia’s Supply Tensions in the Second Quarter

According to foreign reports on April 17th, the tight supply of nickel ore in Asia may ease between April and June, as Indonesian production is expected to increase following the government’s decision to expedite the approval process for mining quotas.

Indonesia, the world’s largest nickel producer, experienced delays in mining approvals at the beginning of the year, leading to tight supply and soaring prices. Indonesia has extended the validity period of mining plans from one year to three years, reducing the frequency of quota reapplications, but this has led to prolonged approval times and a slowdown in license approvals. Market participants now expect that with the acceleration of Indonesia’s mining quota approvals and the resumption of shipments after the Philippine monsoon season, nickel ore supply will gradually improve in the second quarter, potentially putting downward pressure on nickel prices.

Jason Sappor, Senior Analyst for Metals and Mining Research at S&P Global Commodity Insights, stated: “We expect the global nickel market to remain in surplus by 128,000 tons in 2024, as downward pressure on Indonesian primary nickel production will be alleviated with more quotas being approved.”

Recently, market participants have been anticipating adverse weather conditions, labor, and equipment shortages. Additionally, significant holidays in Indonesia and the Philippines will continue to impact mining operations and the production of secondary nickel products such as NPI (Nickel Pig Iron) and nickel sulfate.

The Asian nickel market in the first quarter was also supported by tight supplies of MHP (Mixed Hydroxide Precipitate) and nickel sulfate, coupled with concerns about delays in the approval of Indonesian mining quotas, leading to bullish market sentiment. Overall, the strong nickel market in the first quarter provided support for other products in the value chain, including prices for nickel pig iron, nickel sulfate, and MHP.

Nickel pig iron (NPI) production accounts for a large part of Indonesia’s primary nickel output. Despite weaker-than-expected demand from stainless steel mills, NPI prices did not see significant declines in the first quarter. However, market participants note that current prices are close to the production costs of some smaller producers, and losses may widen in the second quarter.

With the stainless steel market generally weak, the demand for NPI from steel mills has been lower than expected. An international trader mentioned that there could be reductions in stainless steel production in the second quarter, which might further suppress demand for NPI.

[Source – 上海有色网] 印尼镍矿供应可能增加 第二季度亚洲供应紧张局面有望缓解

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