The price of nickel significantly on Monday September 2nd, as the Indonesian government confirmed a halt on exports by 2020.
Nickel for delivery in three months rose to a 5-year high of $18,785, an increase of $2,560 from Thursday’s $16,225.
Indonesia is second only to the Philippines in exporting nickel ore around the world. China accounts for the majority of this export market, the nickel is processed into nickel pig iron (NPI), a cheaper alternative to pure nickel.
It is unclear how the Chinese will react to this decision. They are already the major partner in building up Indonesia’s industrial capacity. Chinese firm Tsingshan has funded a large stainless plant in the Morolawi region of the country and still plan to build more cutting edge factories.
Jakarta has promised at a partial ban for years, first in 2014 and again in 2017. Recent hints that the original 2022 deadline was being brought forward have caused the price of nickel to gain from its summer low of $11,500 a tonne. Analysts at Goldman Sachs have said the price of nickel could rise to $20,000 a tonne by December.
The implementation of a full ban has nonetheless shocked investors and manufacturers around the world.
Colin Hamilton of BMO Capital Markets stated that the decision “leaves a hole of around 100,000 tonnes per annum in the nickel market for the next couple of years, even assuming alternate suppliers step up and domestic smelting projects are advanced.”