Despite Thinness, Indonesia's Nickel Reference Price Still Rises 0.27% in May 2024

The Indonesian Ministry of Energy and Mineral Resources (ESDM) set the reference price for nickel at US$17,472.38 per dry metric tonne (dmt) in May 2024.

This figure represents a slight increase of approximately 0.27% compared to April 2024, which stood at US$17,424.52 per dmt. The upward trend continues, considering the significant 8.75% increase in April 2024 from March 2024's US$16,021.67 per dmt.

This reference price was established through Indonesian Minister of Energy and Mineral Resources Decree Number 112.K/MB.01/MEM.B/2024 concerning the Reference Price for Metal Minerals and Coal for May 2024, issued on May 21, 2024.

(Read Katadata: [link to Indonesian article])

Katadata reported that nickel prices surged to their highest level in almost nine months. This was triggered by political unrest in New Caledonia, a country with one of the world's largest nickel reserves and accounting for approximately 6% of global nickel production.

Nickel futures jumped nearly 7% on the London Metal Exchange to US$21,150 per ton on May 19th. The increase slightly moderated by the end of trading, recording a rise of around 5%. However, the price corrected to US$21,080 per ton at the close of trading on Monday, May 21, 2024.

The price surge last weekend coincided with the release of a report by the International Energy Agency (IEA) forecasting high demand for nickel and other minerals crucial for the transition to greener energy.

“We have seen this unrest. If New Caledonia has ongoing issues, then this will impact the price,” said Dan Smith, an analyst at Amalgamated Metal Trading, as quoted by the Financial Times on Tuesday, May 21, 2024.

Nickel prices have fallen by approximately 32% from around US$31,000 at the beginning of 2023 due to increased supply from Indonesia, the largest producer, coupled with weaker-than-expected demand driven by lower-than-anticipated electric vehicle sales.

(Read also: [link to Indonesian article])