Indonesia Morowali Industrial Park Cuts Nickel Pig Iron
- Indonesia Morowali Industrial Park ordered nickel pig iron cuts of around 100,000 tonnes on September 22, according to Bloomberg, following an El Niño-linked water shortage that affected tenant...
- Jakarta lowered its 2026 mining quotas from 379 million tonnes in 2025, according to Reuters columnist Andy Home.
- Despite the production cuts at Indonesia Morowali Industrial Park and tighter domestic mining caps, benchmark prices remain muted.
Indonesia Morowali Industrial Park ordered nickel pig iron cuts of around 100,000 tonnes on September 22, according to Bloomberg, following an El Niño-linked water shortage that affected tenant smelters. London Metal Exchange three-month nickel rose 2.1% over two sessions before slipping to $16,475 per tonne on September 24. The reduction equals roughly 2.4% of the facility’s 4.2 million tonnes of annual installed capacity, while Jakarta’s 2026 mining quota sits at 250 million to 260 million tonnes, below the 315 million tonnes required by Indonesian plants operating at full capacity.
Quota Shortfalls and Offshore Processing
Jakarta lowered its 2026 mining quotas from 379 million tonnes in 2025, according to Reuters columnist Andy Home. To bridge the 55-million to 65-million tonne annual deficit, processors turned to offshore raw material. Indonesia imported 11.4 million tonnes of Philippine direct-shipping ore from January to July, representing a 67% increase year-on-year based on World Bureau of Metal Statistics data cited by Reuters. This influx of raw material has kept metal output flowing despite domestic mining restrictions. The quota system also accommodates mid-year allocation reviews for specific operators. Eramet’s Weda Bay mine received a raised allocation after exhausting its initial 2026 quota in May, Reuters reported. Because neither Jakarta nor individual operators publish quota top-ups publicly, Philippine direct-shipping ore exporters face volume shifts without advance warning. Intermediates produced in Indonesia continue feeding Chinese refined output, pushing combined London Metal Exchange and Shanghai Futures Exchange stocks to 478,000 tonnes, which represents about seven weeks of global consumption.
Market Response and Inventory Levels
Despite the production cuts at Indonesia Morowali Industrial Park and tighter domestic mining caps, benchmark prices remain muted. The London Metal Exchange cash price settled $155 below the three-month contract on September 24, indicating a contango market structure where prompt metal is cheaper than forward supply, signaling ample nearby availability. London Metal Exchange on-warrant stocks increased 5.5% from an August low of 264,444 tonnes to reach 278,898 tonnes on September 24. Broker consensus values reflect caution regarding future deficits. The S&P Capital IQ broker consensus places 2026 nickel at $7.91 per pound, roughly $17,440 per tonne. If Philippine ore arrivals remain steady, the International Nickel Study Group forecast of a 32,000-tonne deficit for 2026 may fail to materialize in exchange inventories, keeping prices below consensus thresholds. Conversely, if regional monsoon weather curtails Philippine shipments between November 2026 and February 2027, the Indonesian quota will tightly bind on metal output, potentially driving prices toward the 2027 consensus of $8.02 per pound, or about $17,680 per tonne.
