Nickel Price Premium to Copper Slumps Amid Indonesian Market Dominance
What happened
The premium of nickel prices to copper is currently collapsing, driven by Indonesian dominance in the nickel pig iron trade. Since large-scale nickel mining began in the mid-19th century, nickel has averaged about 2.85 times copper’s price when trading on the London Metal Exchange since 1987. In recent weeks, this premium has fallen to approximately 1.11 times.
From smh.com.au
Why it matters
The shift indicates that the energy transition is heavily reliant on the uncertain supply of copper. Nickel is used to produce stainless steel for various applications, including electric cars and data centers. The current slump challenges the long-term pricing stability of the metal.
From smh.com.au
Who's involved
- IndonesiaGeopolitical state whose resource extraction is central to the market shift.
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- Ministry of Energy and Mineral ResourcesSpeculative
The shift in Indonesian mining dominance might require the Ministry of Energy and Mineral Resources to adjust resource extraction and trade policies.
- Freeport-McMoRanSpeculative
The shift in nickel pig iron trade dominance and pricing could impact the profitability of major producers.
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The entities involved
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Indonesia
island country in Southeast Asia and Oceania
Related events
- Raw nickel is being sourced from Indonesia to drive investment in a pCAM production facility.
- Indonesia is seeking incentives for nickel-based battery production and has formalized critical minerals partnerships via MOUs.
- The mining industry in Indonesia is facing increasing difficulty in reaching ore.
- The global copper market is facing simultaneous pressures from an outage at Indonesia's Gresik smelter and the DRC imposing a blanket export ban on raw copper concentrates.
- Indonesia is providing alternative cobalt supply while the global outlook is being shaped by export restrictions from the DRC.