Indonesia announces another nickel ore export ban

Indonesia announces another nickel ore export ban

This week Indonesia announced a ban, to start in the new year, on the export of nickel ore. While it will disrupt supply chains and freight demand, it is not a unique event, with a similar ban put in place in 2014, something brokers Braemar ACM noted in a recent release which saw a short-lived but profitable spike in freight rates as producers boosted trade to beat the restriction. The surging nickel price at the moment would suggest another surge is likely before year-end.

The new restriction on the export of low grade nickel ore – export of high grade material is already prohibited – brings forward to January 1 2020 a ban that was already scheduled for 2022. It is expected to take 2m tonnes of supramax cargoes out of the market next year.

“With Indonesia’s withdrawal from the market, China, the major buyer, will look to its other suppliers for additional material. It is not clear if the Philippines will be able to expand output; it doubled volumes from 2011-2013 in the runup to the first ban, and has maintained sales since then, but its trade is very seasonal. With this in mind, it is little wonder that the nickel price has bucked the trend of many other commodities over recent months to hit new five-year highs, with analysts expecting a nickel deficit to open up,” Braemar ACM noted.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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