Have nickel prices reached the bottom?

Monthly Stainless Metal Index (MMI .).) 8.87% from June to July. after, after Nickel prices They reached the mid-July low, and followed the trend of the base metal upwards. But by the beginning of August, the recovery faltered and prices resumed their decline.

Both last month’s increases and this month’s decline were very narrow. For this reason, prices appear consolidated in their current range, without leaving a clear direction for the next month.

Indonesia plans new export taxes

Indonesia continues to seek the added value of its nickel reserves. It is hoped that this will help develop its production capacity of stainless steel and batteries through export taxes on raw materials. Back in 2020, Indonesia banned the export of nickel ore completely. The goal was to pressure the mining sector to invest in processing capacity.

The move forced China to replace ore imports with iron ore nickel and ferric nickel in an effort to feed stainless steel mills. Now, Indonesia is planning to Add Export tax for both of these products. This financing should be provided to allow for additional investment in the steel supply chain. Since 2021, Indonesia accounts for almost alone Half of all global nickel production.

Historical impact on nickel prices

The first export ban on nickel ore was signed in January 2014. After this ban is enforced, Nickel prices It rose 39% during the first five months of that year. In the end, market dynamics pushed prices down again. This massive price increase occurred despite weak economic conditions around the world, including parts of the European Union. For Indonesia, the ban had the intended effect as several companies in both Indonesia and China soon announced plans to build NPI facilities in the archipelago. Outside Indonesia, the ban has forced countries such as China, Australia and Japan to look for other sources of the mineral. Before long, companies secured direct shipment of ores (DSO) from places like the Philippines and the Solomon Islands.

Indonesia pretty much ease The ban in early 2017. This was due to several factors. One was the 2016 budget deficit. Another has to do with how successful the ban was – spurring the development of nine additional nickel smelters (up from two). Ultimately, this sent nickel prices down nearly 19% during the first half of 2017 alone.

Future nickel prices and Chinese imports

Despite previously stated intentions to reimpose the export ban in 2022, Indonesia has instead scrambled to resume it until January 2020. The decision aims to boost the domestic processing sector, which has experienced rapid development during that period. The move also caused China to ramp up its NPI and stainless steel projects in Indonesia, significantly limiting crude imports. China imports the NPI from Indonesia too rose as a result of. However, the re-ban did not have the same effect in terms of price direction. This was most likely due to the emerging epidemic. Instead, prices remained within an overall downtrend that did not bottom until late March of that year.

Export taxes on the horizon

The latest announcement of possible export taxes comes as a result of the increased flow of nonprofit exports. It was supported by the expected increase in the number of non-profit local iron and nickel processing facilities. In fact, the current estimate expects an increase from 16 facilities to 29 in just five years. However, the low value product and limited exports from NPI will stimulate foreign investment in Indonesia as the countries seek to manufacture batteries and stainless steel. It will also force importers such as China to look for alternative sources of their supplies.

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However, the announcement has not yet caused any noticeable price increase. Instead, nickel prices have continued to fall since their last rally halted again at the beginning of August. According to Seitian Hario Seto, Deputy Coordinating Minister for Maritime Affairs and Investment, the tax could start as early as the third quarter of 2022. However, an official date has not been announced yet. When it comes down to it, the announcement alone is likely to lead to a sharp increase in the exports of the non-profit Indonesia as countries prepare to absorb the tax. Of course, any actual response from nickel prices is likely to follow the scheduled tax date.

European Commission launches anti-fraud investigation

On July 26, the European Commission Launched New anti-fraud investigation. The subject was hot rolled stainless steel sheets and coils imported from Turkey, but originating from Indonesia. EUROFEREThe European Steel Producers Association has raised an investigation into allegations that imports from Turkey are in violation of anti-dumping measures imposed on Indonesia. Indonesia is still home to many Chinese stainless steel manufacturers. For now, the case is expected to be concluded in the next nine months. Meanwhile, all SSHR imports from Turkey will be registered with immediate effect in accordance with European Commission directives.

Could the United States be next?

So far, President Biden has largely continued the protectionist approach against China outlined by his predecessor. While the outcome of the investigation and subsequent response to its findings remain undetermined, Europe’s actions could inspire the United States to follow suit. After all, anti-dumping has always been a politically favorable agenda. Moreover, the investigation may cause material previously destined for Europe to shift towards the US market. If that happens, it could encourage US factories to push for political action to protect domestic interests.

by AG Metal Miner

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