Nickel flowing to Europe shows Indonesia’s grip on global supply

Bloomberg News | September 13, 2024 | 

Nickel smelter in Sorowako, Indonesia. Credit: Marcelo Coelho, courtesy of Vale

European makers of stainless steel are turning to Indonesia for nickel as the country’s booming output forces plants in other countries to shutter.


Exports to Europe of Indonesian nickel pig iron — an ingredient for stainless steel used primarily by Chinese producers — to Europe have surged to 87,485 tons this year from just 1,006 tons in 2023, according to Indonesian government data. The Netherlands, Italy and the UK have taken the shipments, the data show.



The swelling exports reflect Indonesia’s growing dominance of the nickel market, with its output now accounting for more than half of the world’s total. European mills typically use ferronickel, a higher-purity alloy than nickel pig iron, but many plants that make it have shut down due to competition from Indonesia.

Those include plants in New Caledonia and the Dominican Republic, which were formerly significant exporters of ferronickel to Europe. Meanwhile, imports from Russia, formerly a major supplier of purer forms of nickel also used for stainless steel, have been curtailed since the invasion of Ukraine in 2022.

That’s a headache for European stainless-steel producers trying to source the metal without sacrificing their green credentials. Indonesia’s nickel industry has been criticized for its association with environmental destruction, lax safety standards, and high carbon intensity, which has deterred some companies from buying it.

Producers shipping nickel products from Indonesia to Europe include Gunbuster Nickel Industry, owned by China’s ailing Jiangsu Delong Nickel Industry Co., and local firm PT Trimegah Bangun Persada, better known as Harita Nickel, according to people familiar with the matter.

Lukito Gozali, head of investor relations at Harita Nickel, said the firm was always open to the opportunities to work with customers globally. A spokesperson for Gunbuster Nickel Industry didn’t respond to an emailed request for comment.

China’s economic woes could also be undermining demand for the metal and driving shipments to Europe as producers are forced to diversify. Asia’s largest economy has long bought the lion’s share of Indonesia’s nickel, but consumption of stainless steel there is flagging due to its struggling property and industrial sectors.

(By Eddie Spence)