Singapore, May 21st (Argus) - Indonesia's new regulations, which aim to unify the export of bulk commodities through state-owned enterprises (BUMN), have already increased the uncertainty for nickel market participants due to the unclear details.
On May 20th, Indonesian President Prabowo stated that the government will require the export of key commodities to be conducted through designated state-owned enterprises, with these enterprises serving as the sole trading counterpart for overseas buyers. This policy will initially cover palm oil, coal and ferroalloys.
As a type of ferroalloy, NPI is expected to be included in the scope of this export policy. This is not the first time that the Indonesian government has promoted centralized management of commodity exports. Previously, the export of tin in Indonesia has been required to be traded through domestic official exchanges (such as ICDX or JFX).
The new policy is expected to be implemented in two phases: from June to August will be the transitional period, during which exporters will gradually transfer their contract, transaction and collection processes to state-owned enterprises, while still retaining some operations; starting from September, all export transactions are expected to be completed entirely through this state-owned enterprise.
Market participants are skeptical about this timetable, believing that implementing it as early as the beginning of June would be too hasty. "It is still in the preparatory stage" and the market is not yet ready.
A trader said that before the policy was announced, Jakarta only consulted a very small number of industry participants. This explains the current lack of support and the widespread skepticism in the market.
Furthermore, the specific scope of "strategic natural resources" remains uncertain. Although ferroalloys are generally considered to be included, other nickel-related products have not been explicitly mentioned. However, the market expects that they may gradually be covered in the future.
The pricing mechanism is also unclear. The market is still unsure whether future transaction prices will be directly set by state-owned enterprises or formed through negotiations between buyers and sellers. Some participants expect a new pricing system to be introduced, but the specific plan still needs to be confirmed.
The complexity and uncertainty brought about by the new regulations have made market sentiment more cautious, and participants are closely monitoring the subsequent policy developments.
As of 12:30 Singapore time (04:30 GMT), the Jakarta Composite Index dropped by 2.5%; the price of the LME three-month nickel futures showed limited reaction, falling slightly by 1.2% to $18,772.50 per ton on May 20.
Nevertheless, the market generally expects that this policy will eventually be extended to more nickel products, thereby tightening supply and providing support for prices.
Argus Indonesian Nickel Index (INI) Report
The Agus Indonesia Nickel Index (referred to as INI Index) includes weekly price assessments of secondary nickel and intermediate products of different grades, based on FOB (Free On Board) from Indonesia:
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