" It may even encourage new supply, judging by Poseidon Nickel's plans to return to a long-dormant deposit in Australia "
NICKEL PRICE UP, DOWN, UP
Seven Chinese companies are planning to build nickel ore processing plants in Indonesia, according to Xu Aidong, chief analyst at state research house Antaike.
Which of course is precisely the point of the ban, lifting the value of mineral flows through beneficiation.
But, contrary to expectations, there was no preemptive exemption on the shipment of ore for those companies that have already begun work on processing plants.
The ban right now is total and, judging by those official production forecasts for this year, the mines ministry is not expecting much to change.
The impact on the London Metal Exchange nickel price might be said to have already been and gone. Three-month metal surged from under $13,500 per tonne to almost $15,000 when the market realised the full extent of the ban. The price has since given back most of those gains, trading at around $13,900 per tonne this morning.
And it might be argued that the ban is actually short-term negative for the nickel price because it will discourage other producers from curbing output in a structurally over-supplied market.
It may even encourage new supply, judging by Poseidon Nickel's plans to return to a long-dormant deposit in Australia.
Moreover, everyone knows that Chinese importers had been stocking up ahead of the January deadline, meaning there will be no immediate hit on run-rates in the nickel pig iron (NPI) sector, which is highly dependent on Indonesian ore supplies.
However, there is a secondary, less obvious price impact now taking shape.
The price of that stockpiled nickel ore in China AM-18C-NORE has already started rising in what is probably the first sign of the potential for cost inflation in the NPI sector.
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