Nickel Production Cuts in Indonesia Due to El Niño-Driven Drought
What happened
El Niño-driven drought is forcing smelters at the Indonesia Morowali Industrial Park to cut nickel pig iron production due to reduced water supply needed for cooling and equipment protection. The affected volume of nickel pig iron could be around 100,000 tons of NPI production. Tsingshan Holding Group, which majority owns the Morowali facility, had previously warned that production cuts of 30% to 40% might be necessary if the water situation did not improve.
From miningweekly.com
Why it matters
Indonesia is the world's largest producer of nickel, accounting for over half of global output. The reduction in supply from the Morowali industrial park could help arrest the decline in nickel prices, which had fallen about 18% on the London Metal Exchange since early May.
From miningweekly.com
Who's involved
- Tsingshan Holding GroupMajority owner of the Morowali industrial park facility
- MorowaliLocation of the industrial park where production cuts are occurring
- IndonesiaWorld's largest producer of nickel, where the production cuts are happening
- London Metal ExchangeFutures exchange tracking nickel price movements
- El NiñoClimate event driving the drought and subsequent production cuts
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.
- BlueScope SteelSpeculative
BlueScope Steel might face supply chain disruption for nickel pig iron raw material input.
- London Metal ExchangeSpeculative
The reduction in supply could help stabilize nickel prices on the London Metal Exchange.
- IndonesiaSpeculative
Indonesia's nickel industry might face economic strain due to the drought and production cuts.
Keep exploring
The entities involved
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Tsingshan Holding Group
steel products manufacturer
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London Metal Exchange
futures exchange in London, England
- Conflict in the Middle East is driving market volatility and risk, with talks underway to resolve the situation.
- Global resource competition is intensifying as countries seek to build processing capacity outside of China, amid concerns over its rare earth dominance and the challenges facing producers like those in Northwestern Ontario and Belarus.
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El Niño
Spanish rap artist