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What are the impacts of permit reviews on Indonesia's nickel industry?

Jun 18, 2024

 

Impact of Permit Reviews on Indonesia's Nickel Industry

According to a comprehensive report from foreign media on June 17, 2024, the Indonesian government has announced a comprehensive assessment of the permits for rotary kiln electric furnace (RKEF) smelters that produce ferronickel and nickel pig iron—key ingredients for stainless steel production. In recent years, Indonesia has become a major nickel producer, with production increasing from about 800,000 tons in 2020 to 2 million tons in 2023. In 2023, the country's nickel pig iron production accounted for more than 90% of its nickel output, accounting for about 35% of the global nickel supply.

However, the move to review permits is aimed at reserving the rapidly depleting ore for higher-value nickel products, such as MHP (Mixed Hydroxide Product) and nickel sulfate used for electric vehicles. There are currently no signs indicating how this move will affect existing permits. Data from Morgan Stanley suggests that by 2030, Indonesia's nickel pig iron production is expected to grow by nearly 30%. These estimates may face downside risks, depending on the future status of production permits and whether current permits will be subject to any restrictions. The trading price of nickel pig iron is 33% lower than the LME price, while the trading price of products like nickel sulfate is almost on par.

Analysts have stated, "This situation highlights the inherent supply risks of a commodity that is geographically so concentrated in one country." They added, "This could help reduce the discount of Indonesian nickel prices relative to LME prices and may also slow down the growth of Indonesian nickel production in the short term, especially if the currently operating factories are also affected." "Under the same conditions, compared with our current model, this could tighten the supply and demand balance."

Americ Energy (CHINA) Co., Ltd. stands as a prominent manufacturer and distributor of a comprehensive range of stainless steel products, designed to cater to the diverse needs of various industries. Their offerings encompass stainless steel tubes, plates, strips, and square tubes, all manufactured to uphold the highest quality benchmarks.

Contact Information:

- Website: www.metal-ae.com

- Email: ae@americenergy.com

- Phone: 13521210668

- WhatsApp: 13521210668

- Address: No.298 Fengwei Road, Xishan Development Zone, Wuxi City, Jiangsu Province, China

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