Indonesian Nickel Export Ban Severely Affects Stainless Steel

Nickel prices last Friday surpassed the $ 16,500 /t level recorded 12 months ago. High nickel prices are the result of a decrease in the supply of laterite ore due to the ban on the export of raw materials from Indonesian mines.

Analysts are focused on determining the impact of this ban on stainless steel, electroplating and nickel alloys that could be prone to market shocks. The direct impact of the ban will affect the Chinese NPI industry, weaned from the main source of raw materials.

In 2013, Chinese nickel pig iron production was in the range of 460 - 500 kg Ni per tonne. About 80% of this was produced in modern electric rotary kilns, for which the preferred raw material is ore with a minimum nickel content of 1.5%.

Nickel reserves are estimated to be sufficient for a period of six to eight months, and continued shipments of ore from the Philippines will allow NPI production in 2014 to be only slightly below 2013 levels. In the future, growth in stainless steel production in China may slow down, but is unlikely to decline in the near future.

With regard to the prospects for the production of heat-resistant and other nickel alloys (4.2% and 7.2%, respectively), as well as alloy steels after 2014, the main alternative source of laterite ore will be in the Philippines. Production from these mines competed with Indonesia in terms of nickel content and yields, which are projected to increase by 15% to 20%. However, this growth will not be enough to completely fill the gap left by Indonesia.

Taking into account these dynamics until 2018, until which the Indonesian ban on the export of raw materials will continue, nickel prices are forecast to rise to $ 24,350 per tonne.