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Indonesia Aims to Cap Nickel Prices at $18,000

  • Nickel prices rose in February after a drop, leading to a slight pick-up in stainless steel demand.
  • The increase in nickel prices is expected to raise surcharges for stainless steel in April.
  • Indonesia, a major nickel producer, aims to cap nickel prices to benefit electric vehicle battery production.
Mining Truck

Via Metal Miner

Nickel prices inverted to the upside in February, with an 8.71% month-over-month rise. Following a 3.53% increase during the first weeks of March, prices appeared to stagnate after they found at least a short-term peak on March 13.

Overall, the Stainless Monthly Metals Index (MMI) remained sideways, with a modest 1.95% rise from February to March.

Stainless MMI, March 2024, the current nickel price

Distributors Note Slight Pick-Up in Q1

The stainless market saw a significant boost in recent weeks, although distributors stopped short of referring to it as a market turnaround.

Bullish nickel prices throughout February triggered some buyers to return to the market. However, while sources saw conditions improve from Q4, they still considered it a disappointment compared to previous Q1s, which typically represent a seasonal high point within the business cycle. This led to diverging outlooks for Q2. While some expect continued improvement within the market, others feel the pick-up will be short-lived, especially if nickel prices return to the downside.

Mill lead times appeared slightly longer in recent months due to increased orders, but they remained historically short by early March. This suggests that while market supply tightened in recent months, demand conditions remain below what would be considered historically normal levels.

Nickel Prices to Boost Surcharge for April, But Momentum Slowing

Nickel prices appeared to find a bottom in early February, falling to $15,880/mt on February 6, their lowest level since November 2020. While they sit beneath their March 13 high, nickel prices remain almost 16% above their low following their month-long rebound.

Correlation analysis, stainless steel surcharges

Source: MetalMiner Insights, Chart & Correlation Analysis Tool

For the stainless market, the bounce in nickel prices appears to be enough to elevate the soon-to-be-announced April surcharge from domestic producers. While NAS base prices have remained flat since December 2021, the 304 surcharge found a peak in May 2022. From there, bearish nickel prices dragged the surcharge down almost 56% to where it currently stands – its lowest level since January 2021.

Investment funds, LMW Commitments of Traders Report

While markets expect a higher surcharge in April, the outlook beyond that appears hardly bullish. According to data from the LME’s Commitments of Traders Reports, market positioning remained net short by early March. Indeed, the rebound in nickel prices appeared driven by the unraveling of some short bets, but it was not enough to shift what remains a decisively bearish bias among investment funds.

Meanwhile, the overall market, which accounts for positions among traders and other institutes, saw short bets begin to pick up after nickel prices found a bottom. This signals market participants still expect further downside.

Indonesia Vows to Cap the Current Nickel Price

Indonesia remains the overwhelming leader in the nickel market, which has given the archipelago a strong influence over price. News of delays within Indonesia’s approval process for nickel mine output quotas led to market concern over supply, which likely helped fuel the most recent increase in nickel prices. Some went as far as to warn of a looming deficit should output remain constrained.

However, those fears appear likely overstated, as the government quickly responded to quota delays by accelerating the approval process. Currently, full resolution seems on track to finish up by the end of March.

stainless should-cost model, the current nickel price


We know what you should be paying for metals — MetalMiner should-cost models are the ultimate savings hack by showing you the “should-cost” price for gauge, width, polish and finish adders. Explore what value they can add to your organization. 

Once Indonesia makes it over this latest hurdle, the country aims to exercise its dominance within the nickel market to control global pricing. According to government official Septian Hario Seto, Indonesia intends to maintain sub-$18,000 per metric ton LME pricing. Amid the rise of new EV battery technologies, some of which do not include nickel, Indonesia is likely hoping to keep nickel-containing batteries a profitable choice for EV producers. For reference, nickel closed the week of the 15th at $18,350/mt.

Short of “green nickel” tariffs, there is little doubt that Indonesia can drag nickel prices lower amid robust output. While it has drawn the ire of mines elsewhere, Indonesia’s use of cheaper but dirtier coal to fuel its mining operations gives it the market advantage over costs. 

By Nichole Bastin

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