Indonesian Ban Likely to Spur “Gradual” Nickel Price Increase: Roskill

In a Q&A session published today, Thomas Hohne, nickel analyst at Roskill, addresses some of the key questions related to Indonesia’s ban on unprocessed mineral ore exports, set to come into place in January.

Commenting on the ban’s effect on the nickel market, Hohne said:

Indonesian nickel ore accounted for approximately 59% of China’s nickel ore imports in 2013, but demand for nickel ore has been artificially elevated in anticipation of the ban. Although Roskill estimates Chinese production of charge and refined nickel at 659kt in 2013, real demand is considerably lower. Stockpiles of unprocessed nickel ore in Chinese ports are estimated to be in the range of 20Mt, while consumer stocks of nickel pig iron (NPI) are estimated at over 280kt. Roskill also expects that in spite of a temporary disruption early in the year, ore exports from Indonesia will continue, with the Philippines increasing exports.

Production of NPI in China is expected to flatten out, bringing supply in line with real demand. So far, the effect on prices of the announced ban has been relatively subdued. Prices made a small recovery in the first week of December, but this followed a drop in November that pushed the price of nickel back to well under US$14,000/t. In combination with the stockpiles of nickel ore and NPI, there is sufficient flexibility in the market such that any increase in prices as a result of the ban will likely be gradual, although speculative activity could result in short-term spikes.

Click here to read the full Q&A with Hohne.