The Indonesian government has announced a sudden ban on nickel ore exports, effective immediately, two years ahead of the previously planned date of Jan 1, 2020. With nickel reserves worth $350 billion, Indonesia aims to boost the construction of smelters in the country.
Following the news, there was a 2.2% surge in the benchmark nickel on the London Metal Exchange, reaching $17,000 a tonne. Similarly, the most active nickel contract on the Shanghai Futures Exchange rose by 2.8% to reach a two-week high of 136,630 yuan ($19,363.94) a tonne.
The ban is seen as a move to reinforce Indonesia’s local smelting industries and cater to the growing demand for nickel pig iron, stainless steel, and electric vehicle batteries. The country currently has 11 operational smelters with an input capacity of 24 million tonnes of ore and plans to add 25 more units to meet the annual demand of 81 million tonnes of nickel ore.
Market analysts predict that the ban could lead to supply shortages and keep nickel prices high globally. However, some experts believe that nickel is currently overpriced and anticipate a retreat in prices soon. Despite differing opinions, Indonesia’s decision is expected to have a significant impact on the nickel market and the global supply chain.
