Nickel Price Influenced by Export Bans of Indonesia and the Philippines
The global nickel price declined 5.1 percent on Tuesday (09/09) after it became known that the Philippines would not implement a ban on exports of this commodity yet. Similar to Indonesia, the Philippines was preparing to implement a ban on exports of unprocessed minerals in an attempt to boost revenues (by exporting mining products with added value). However, it may take seven years before such a policy is implemented. This implies that the occurrence of a possible shortage of nickel on the global market in the coming years has diminished.
After Indonesia implemented the ban on exports of mineral ore in January 2014, the price of nickel rose rapidly from USD $14,000 to USD $19,000 per ton as the country is one of the major global suppliers of nickel. Over 25 percent of the global nickel supply originated from Indonesia, Southeast Asia’s largest economy. However, the Indonesian government decided to take a more protectionist approach in its mining sector through the new Mining Law (2009). This law also aims to increase state revenue by banning exports of raw minerals (in an effort to boost domestic processing facilities to produce added-value mining products). Prior to implementation of the export ban, Indonesian miners exported as much nickel as possible resulting in a declining nickel price until the export ban became effective on 12 January 2014. Moreover, abundant nickel reserves in China also supported a weakening nickel price. However, due to Indonesia’s export ban and China’s shrinking nickel reserves, the price has gone up significantly since the start of the year. Analysts claim that up to mid-2016 global nickel demand may outpace the nickel supply.
It is possible that the nickel price will increase further in the next two and a half years but not certain as Indonesia’s export ban is old news by now. Furthermore there has emerged speculation that Chinese traders in Indonesia bypass the government’s export ban by labelling nickel ore as iron ore in order to continue nickel exports (causing a larger global nickel).
After implementation of Indonesia’s mineral ore exports ban, the Philippines has emerged as the main supplier of nickel ore to China's massive nickel pig iron (NPI) sector.
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