📈 Indonesian Nickel Ore Prices Soar While Stainless Steel and NPI Prices Continue to Decline

1. Multi-Factor Disruptions Tighten Supply Further

Continuous rainfall across Sulawesi since November 2024 has severely disrupted nickel mining activities, pushing May's premium to $25 per wet ton, up from $16 in January. Sulawesi holds roughly 70% of Indonesia's nickel reserves. Although the rainy season typically ends in March, the 2025 wet season extended into April, affecting operations in the key Morowali Industrial Park.

Further tightening is expected as state-owned PT Aneka Tambang (Antam) has been ordered to suspend nickel mining operations in Raja Ampat, West Papua, an internationally recognized marine conservation zone known for coral reefs and biodiversity. The region produces high-grade ore with an annual quota of 3 million wet tons.

2. Divergence Between Sales Strategy and Market Expectations

Amid tightening supply, Indonesian miners have shifted from bilateral negotiations to tender-based sales mechanisms over the past several months.

A trading source revealed that buyers are now willing to pay an additional $1–2 per wet ton for bulk orders over 100,000 wet tons, aiming to secure long-term supply, a reversal of typical market dynamics where large volumes often receive discounts.

3. Downstream Products See Continuous Price Drops

Despite rising ore prices, downstream products continue to weaken.

1. Indonesian Nickel Pig Iron (NPI) export prices dropped from $124.50/mtu in March to $116/mtu in June.

This price downturn has been largely driven by ongoing U.S.-China trade tensions. NPI remains a key raw material for producing 304 stainless steel in China.

4. Market Remains Structurally Imbalanced

Since 2023, the Indonesian nickel ore market has been dominated by sellers. However, a disconnect between ore and product pricing persists, driven by:

1. Delayed issuance of mining quotas.

2. Extended periods of heavy rainfall disrupting production.

Nickel product output in Indonesia, including NPI, ferronickel, MHP, and matte, is projected to grow from 1.83 million tons of nickel equivalent in 2023 to 2.49 million tons in 2025, pushing ore demand from 200 million wet tons to 280 million wet tons.

5. Import Dependency Intensifies

Due to insufficient domestic ore, Indonesian NPI and intermediate product producers are increasingly sourcing ore imports by sea.

1. Since mid-2023, imports from the Philippines have surged.

2. In 2024, Indonesia imported nearly 10 million wet tons, equivalent to 130,000 tons of nickel metal, accounting for roughly 6% of total demand.

3. In just the first four months of 2025, imports exceeded 2.6 million wet tons, surpassing the entire first half of 2024's 2.3 million tons.

Philippine ores are now mixed with local ore to meet the required silicon and magnesium balance for different refining methods, such as RKEF (Rotary Kiln-Electric Furnace) and HPAL (High-Pressure Acid Leach). After 15 years of rapid mining, Indonesia's ore composition has changed significantly, increasing reliance on blended imports.

🔍 Dong-Yu Stainless Steel Enterprise Co., Ltd. Commentary

The divergence between soaring nickel ore prices and declining stainless steel/NPI prices reflects a profound structural dislocation across the value chain. In our view, this signals three strategic shifts:

1. Upstream Control ≠ Downstream Profit While miners tighten grip on pricing via tenders and quotas, end-user markets remain weak. This suggests cost inflation without value transmission, a risky environment for midstream players without pricing power or inventory agility.

2. Ore Composition Now Drives Trade Flow With Indonesian ore composition deteriorating, mixed-ore compatibility has become more than a metallurgical requirement, it's now a supply chain strategy. Producers must rethink long-term blending solutions and cross-border sourcing portfolios.

3. The Rise of Resource Diplomacy The shift from local mining to imported ore is not just logistical, it's geopolitical. Indonesia's reliance on the Philippines, and eventually other ASEAN or African sources, could reshape regional nickel alliances and pricing benchmarks.

At Dong-Yu, we advise partners to:

1. Reassess raw material sourcing strategies beyond just price.

2. Build flexibility into production planning for raw material composition.

3. Watch for price rebound opportunities in Q4 if policy, rainfall, or trade cycles tighten further.

We remain committed to providing accurate insight, adaptive strategies, and high-integrity supply solutions to our global clients.