Nickel Prices Under Pressure as Indonesia Will Issue New Mining Rules

Nickel prices are under pressure and the market is in a bit of a hiatus, awaiting the Indonesian government’s new mining rules to be released later this week.

Back in 2014, Indonesia announced a ban on ore shipments in effort to encourage miners to build smelters to process ore locally, however, after protests the government granted concessions to concentrate producers. These concessions are scheduled to run out with the ban on the export of mineral concentrates to kick in Jan. 12. But, Energy and Mineral Resources Minister Ignasius Jonan told reporters that rules are being drafted that will allow concentrate shipments beyond the Jan. 12 deadline in certain cases. The new mining rules will cover other details including contracts and permits, exports, taxes, and divestment obligations

Traders have been closely watching the situation given Indonesia is a major producer of nickel and the nickel supply chain has been greatly impacted after the Philippines embarked on a major mining inspection program in 2016 and suspended some miners from producing nickel. More suspensions are possible. The Philippines overtook Indonesia in 2014 to become the world’s top nickel ore exporter.

If Indonesia allows more nickel exports, new supplies could pressure prices, but overall the commodity will remain supported from the Philippine mine shutdowns and solid demand from China. There is some expectation that the Philippines will allow some restarts this year, and that could be a major pressure on prices. Analysts at BMI Research are currently calling for modest increases in nickel prices this year. They see prices averaging $10,500 a ton in 2017.

Leia Toovey has a B.Sc. in geology from Simon Fraser University, and her degree had a focus on resource economics. Out of school, she started working in the booming mining industry of Vancouver, Canada, covering junior mining stocks and commodities including potash, copper, nickel, oil and gold. Then she moved to New York and worked as a commodities analyst covering a breadth of commodities, from the Baltic Dry Index through the softs. As a geologist she has a greater understanding of the exploration and extraction side of commodities, and how changes in technology and the depletion of resources impact pricing. At Economic Calendar she covers a variety of commodities, providing daily technical and fundamental analysis and assessing major market developments.