I. Background of the event
Septian Hario Seto, Indonesia's deputy minister of Marine and Investment Affairs, said the government may impose export duties on nickel iron and pig iron in 2022. Seto said that if the nickel price is above $15,000 / ton, a 2 percent tax, or $300 / ton, will be possible and the tax will increase in proportion to the nickel price. The levy is aimed at pushing nickel miners to process their products before shipping them overseas, otherwise Indonesia's nickel reserves would quickly run out. As soon as the news was sent out, lun Nickel 3 pulled up to around $22700 / ton, causing a stir in the market.
Ii. Analysis of Nickel iron and nickel pig iron industry in Indonesia:
1. Production analysis of Nickel iron and nickel pig iron in Indonesia
According to Mysteel research statistics, as of December 2021, Indonesia has 135 NPI and FENI production lines in total. In 2021, the total production of nickel and iron in Indonesia will be about 890,000 tons of nickel metal, an increase of 45.34%. In 2021, Indonesia will produce about 850,000 tons of medium and high nickel pig iron, with a year-on-year increase of about 49%. Low nickel pig iron about 18,000 tons, a year-on-year decrease of about 3%; FENI is about 25,000 tons, a year-on-year decrease of about 2%.
Since the second half of 2021, the epidemic has become more severe in Southeast Asia. In August, Indonesia has restricted the entry of foreign workers. Due to the impact of the epidemic, the production of nickel iron production line in Indonesia was postponed mainly in the fourth quarter, and 42 new production lines will be increased in Indonesia in 2021, 8 more than 2020.
2. Analysis of China's nickel and iron imports from Indonesia
From January to November 2021, China imported 3.3891 million tons of nickel and iron, with a year-on-year increase of 9.22%. Among them, 2.8464 million tons of nickel and iron were imported from Indonesia, up 15.15% year on year, accounting for about 84% of China's total nickel and iron imports.
3. Mysteel Summary:
This is not the first time Indonesia has considered imposing a tax on nickel iron and pig iron. On June 22, 2021, the Indonesian Ministry of Energy and Mineral Resources (ESDM) government stated that due to the low added value of FENI and NPI products, the government plans to restrict the construction of smelters and FENI and NPI exports, and encourage the construction of first-class smelters such as nickel sulfate or stainless steel plants. At the end of October, Indonesian President Joko Said he planned to ban exports of all raw commodity materials in Indonesia to attract investment in indigenous resource processing, create jobs and add value to products such as nickel ore processing, which could add $35 billion in value.
Indonesia has repeatedly proposed developing a local nickel industry chain to increase the added value of products, which may increase the probability of the imposition of export taxes. But at present, the implementation of the policy needs to be accepted by the market, time and many other factors, the possibility of tax in the short term is not likely, but we have to be ready to meet any challenge.
