Global Nickel Market Downturn May Reinforce Indonesia’s Position as Top Producer
The global nickel market is currently facing a significant downturn, with prices dropping to their lowest level since 2021, which may lead to widespread closures of nickel mines worldwide. However, this decline could paradoxically strengthen Indonesia's position in the global nickel supply chain.
Decline in Nickel Prices
Nickel prices have recently plummeted to US$16,000 per metric ton, and Citigroup predicts a further decline to US$15,500 in the next three months. This downturn is largely attributed to the global economic slump over the past two years, exerting pressure on the metal market. As a result, major players like BHP Group are reassessing their nickel operations, potentially leading to asset write-downs. First Quantum has already announced the closure of its Ravensthorpe nickel and cobalt mine in Western Australia, coupled with significant workforce reductions.
Indonesia's Growing Dominance
Market analysts observe that Indonesia, the world's largest nickel producer, accounting for about 50% of the global supply, is better positioned to withstand the global nickel product oversupply and price decline. This resilience is due to lower labor and energy costs and the proximity of processing facilities to mines, reducing the need for imports and long-distance transportation.
Over the past two years, Indonesia has added a substantial new supply of nickel products to the market, contributing to the price decline. If other high-cost nickel producers cease operations, Indonesia's dominance in the nickel supply chain is expected to increase.
Despite its strengthening position, Indonesia faces challenges, particularly concerning smelter safety levels. These issues will need to be addressed to maintain its leading role in the global nickel market. As the nickel market adapts to these changing dynamics, the industry is closely watching Indonesia's moves and how they will shape the global supply chain in the face of this prolonged price slump.
