Indonesia could plug nickel pig iron gap caused by its ore export ban

* Indonesia's NPI output could reach 530,000 T by 2020
-analyst
* Indonesia nickel ore export ban to disrupt supply to top
NPI
producer China
* Indonesia's NPI capacity may match China's by 2021 -Wood
Mackenzie

By Mai Nguyen
SINGAPORE, Sept 2 (Reuters) - Indonesia may be able to plug
an expected shortfall in nickel pig iron (NPI) supplies caused
by its nickel ore export ban starting next year by boosting its
own capacity to produce the semi-finished metal used to make
stainless steel.
China, the world's biggest nickel user, has traditionally
imported nickel ore from Indonesia, the world's biggest ore
producer, to produce NPI to make stainless steel. But that
supply chain will be disrupted by the ore export ban set to
start on Jan. 1, part of Indonesia's push to develop a
higher-value domestic metal processing industry. Indonesia accounted for 26% of global nickel ore supplies
last year, according to the International Nickel Study Group,
but since 2016 has ramped up production of NPI, an intermediate
product containing around 10% nickel used by stainless steel
mills.
The increase in NPI production has mostly come from Chinese
companies operating in Indonesia.
From nearly zero in 2014, Indonesia's NPI output climbed to
261,000 tonnes a year in 2018, according to data from
Australia's Macquarie Group Ltd.
That could climb to as much as 530,000 tonnes in 2020,
according to estimates from Chinese trading firm Grand Flow
Resources.
"It is estimated that the annual increase of nickel metal
content in NPI will be 130,000 tonnes a year. The high speed
expansion will extend from 2020 to 2021," said Wang Chongfeng,
an analyst at Grand Flow Resources.
Energy and minerals consultants Wood Mackenzie forecast that
by 2021, Indonesian NPI output will surpass China's, which is
estimated at 570,000 tonnes this year.
"It is possible some, and ultimately all, of the lost NPI
production in China could be offset by NPI production increase
in Indonesia – but this will take some time," said analyst Linda
Zhang of Wood Mackenzie.
The expected disruption of ore supply and the resulting
curtailment of Chinese NPI output has caused nickel prices to
surge.
London nickel CMNI3 hit a five-year high and has leaped
over 70% this year, while Shanghai nickel SNIcv1 hit a record
as markets feared the stainless steel industry, which consumes
70% of global nickel output, will lack supplies.

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Primary nickel production by top producers https://tmsnrt.rs/2kb7ioY
Global nickel prices surge on Indonesian ore export ban, tight
exchange stocks https://tmsnrt.rs/2k8C5CN
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