Jan 13 Almost exactly three years ago Indonesia rocked the global nickel market by banning the export of unprocessed minerals. At the stroke of a presidential pen the flow of nickel ore feeding China’s massive stainless steel sector was cut off.
Now Indonesia has done it again, this time by part reversing that ban. The London Metal Exchange nickel price initially slumped 5 percent on the news to a four-month low of $9,660 per tonne before recovering to $10,275 at the Thursday close.
The tremors have spread to the equities market with the shares of Australia’s nickel producers and Indonesia’s own PT Vale Indonesia experiencing similar turbulence.
The fear is that Indonesia will ramp up both production and exports again, reversing a shift to supply shortfall in the global nickel market and killing off a budding rally in the price from the February 2016 low of $7,550. But will it? Not only is there considerable devil in the detail of this latest policy flip-flop but much has changed in the nickel supply chain since 2014.
SURPRISE?
The first thing worth noting about Thursday’s announcement is that it shouldn’t really have come as a total shock. As long ago as February last year Indonesia’s minister for energy and minerals resources said that some sort of partial revision to the export ban was possible, even probable.
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