More Nickel Supply If Indonesia Eases Export Ban

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If nickel’s outlook already wasn’t good, now it could get worse as Indonesia’s energy minister said recently that the country could ease its ban on nickel ore exports.

Three-month nickel LME price.

Three-month nickel LME price. Source: MetalMiner analysis of Fastmarkets data.

In January of 2014, Indonesia implemented an export ban on nickel ore. The idea behind it was to encourage firms to build smelters to create jobs and shift exports from raw materials to higher-value finished metals. But instead, Indonesia has simply lost billions of dollars as the Philippines has picked up the raw ore slack for, mainly, Chinese producers.

Back in 2014 when the ban was implemented, nickel was trading above $15,000 per metric ton. However, Indonesian companies didn’t expected that nickel would be trading today at half that price. Because of falling nickel prices, many of the smelters that miners intended to develop have not materialized. Now, the government is going to review its export ban policy as miners struggle and Indonesia´s smelting capacity will not be sufficient by next year amid miners’ unwillingness to develop those costly smelting operations.

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In theory, more nickel ore flowing out of Indonesia will only continue to drive prices lower. Nickel recently fell to a near 13-year low although prices made some progress last week, rising with the rest of the metal complex. If Indonesia actually eases its export ban, nickel won’t likely be the first industrial metal to turn up…

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