Indonesia is now working to optimize its domestic nickel trade by establishing its own reference price. Currently, nickel prices are based on international exchanges, which are vulnerable to fluctuations in global market conditions.
The Commodity Futures Trading Regulatory Agency (Bappebti) sees this as an opportunity to strengthen Indonesia’s nickel trading sector. By creating a domestic nickel reference price, Indonesia hopes to reduce dependence on international prices and bring greater stability to its nickel trade.
Bappebti’s Head, Tirta Karma Senjaya, mentioned that Indonesia, which holds the world’s largest nickel reserves, needs to be more aggressive in managing its nickel market potential. “By optimizing nickel trade, we can increase national revenue,” he said in a press statement in Jakarta, Friday, January 31, 2025.
In line with the government’s efforts to encourage downstream processing, strengthen the domestic market, and stimulate business actors, Bappebti has designed a strategy utilizing commodity futures trading (CFT). One of the main objectives is to create a nickel reference price that no longer relies on the volatility of international markets.
Tirta also added that nickel, which was originally widely used in the stainless steel industry, is now increasingly in demand for the production of electric vehicle batteries. With its high price volatility, nickel has become an ideal commodity for trading on the futures exchange.
Additionally, data from the United States Geological Survey (USGS) indicates that Indonesia produced 1.8 million tons of nickel in 2023, about 50% of global nickel production, with major production areas in Central Sulawesi, South Sulawesi, Southeast Sulawesi, and North Maluku. This reinforces Indonesia's position as the world's largest nickel exporter.
In efforts to expand export markets, Indonesia’s main destinations for nickel include China, Japan, Norway, the Netherlands, and South Korea. Bappebti’s strategic moves in regulating nickel trading are expected to further solidify Indonesia’s position in the global market while also providing a positive impact on the national economy.
Nickel Listed Companies Situation
On the other hand, nickel listed companies’ stocks on the Indonesia Stock Exchange (IDX) have been under pressure over the last month due to oversupply in the global nickel market. An analyst from BCA Sekuritas, Muhammad Fariz, predicted an underweight outlook for nickel stocks until next year.
Fariz explained that this is driven by high stainless steel production in China and weak demand, which have led to stockpile buildups and impacted the supply of nickel pig iron (NPI). “The prices of NPI and stainless steel are showing signs of limited price recovery,” he said in a recent research note.
Similarly, research from CGS International also notes that global nickel supply will continue to exceed demand until 2027, although the gap will narrow at a slower pace. The economic slowdown in China and the real estate market have affected the demand for stainless steel and electric vehicles, which are the main consumers of nickel. Consequently, nickel prices are expected to remain capped, even as they approach production costs.
BCA Sekuritas has revised its nickel price projections for 2025-2026, with LME nickel prices estimated at US$17,000 per ton and NPI prices at US$13,418 per ton. Nickel issuer stocks like PT Vale Indonesia (INCO), PT Aneka Tambang (ANTM), and PT Trimegah Bangun Persada Tbk (NCKL) have shown declines since the beginning of the year, with INCO down 15.13%, ANTM down 9.71%, and NCKL down 7.28%.
Despite this, BCA Sekuritas has recommended a BUY rating for ANTM with a target price of Rp2,710 per share, INCO with a target price of Rp4,260 per share, and NCKL with a target price of Rp770 per share, although risks to profitability remain high.
