Posted on 31 May 2023
The Indonesian government is reportedly pausing plans on nickel product export duties until a price index is in place to ease volatility tied to the London Metal Exchange (LME) benchmark.
Speaking at an industry event in Jakarta, Septian Hario Seto, deputy minister of the Coordinating Ministry for Maritime and Investment Affairs of Indonesia, said the new index would be created by year-end, Reuters reported. “We are still asking for the proposal from each index provider. We will see who has the best,” he was quoted as saying.
The upcoming price index is expected to cover nickel pig iron, mixed hydroxide precipitate and potentially nickel matte. LME’s global nickel price is the benchmark for Class 1 nickel (the highest purity nickel products). However, Indonesia is a major producer of Class 2 nickel, mostly used in the steelmaking industry, Kallanish notes.
The LME is struggling to gain market’s confidence that its nickel contract is still relevant since the trading chaos it faced in March 2022. Some industry players are asking for alternative pricing structures. Septian said the government is acting based on feedback from smelters.
The new price index is set to be different from the previously launched one, which focuses on the domestic trade benchmark prices of Indonesian nickel ores graded 1.7% or above.
Indonesia, the world’s largest nickel producer, completely banned exports of nickel ore in 2020. The measure is aimed at adding value to its nickel supply chain, spurring economic development in the country. With the biggest nickel reserves globally, the Southeast Asian nation is pushing to become an EV hub in the region.
The proposed duties are for the exports of processed nickel, for which details remain unknown.
Source:Kallanish
