On January 12, Septian Hario Seto, Deputy Minister of ocean and Investment Affairs of Indonesia, said that Indonesia may start imposing export tariffs on ferronickel and pig iron in 2022. Seto said that if the nickel price is more than 15000 US dollars/ton, a 2% tax, i.e. 300 US dollars/ton, may be levied, and the tax will increase in direct proportion to its price. Once the news was issued, the price of Lun nickel rose to around us $22700 / ton, causing an uproar in the market.
According to the Mysteel survey and statistics, as of December 2021, Indonesia has 137 nickel pig iron and ferronickel production lines in total. In 2021, Indonesia's total output of ferronickel (equivalent to metal) was about 890000 tons of nickel metal, with a year-on-year increase of 45.34%. In 2021, the output of medium and high nickel pig iron in Indonesia decreased by about 850000 tons, with a year-on-year increase of 49%; Low nickel pig iron was about 18000 tons, a year-on-year decrease of 3%; Ferronickel was about 25000 tons, a year-on-year decrease of 2%. In 2021, Indonesia will have 42 new production lines, 8 more than that in 2020.
From January to November 2021, China imported 3.3891 million tons of ferronickel, a year-on-year increase of 9.22%. Among them, 2.8464 million tons of ferronickel were imported from Indonesia, with a year-on-year increase of 15.15%, accounting for about 84% of China's total ferronickel import and about 25% of China's total ferronickel supply (calculated by physical tons).
In terms of smelting cost, Indonesia has great advantages over China's ferronickel. After the imposition of export tariffs, China's import costs will increase, which is bound to promote the price rise of nickel and related varieties in the industrial chain. It is not the first time for Indonesia to consider taxing ferronickel and nickel pig iron. On June 22, 2021, the Ministry of energy and mineral resources of Indonesia said that due to the low added value of nickel pig iron and nickel-iron products, Indonesia plans to restrict the construction of smelters and the export of nickel pig iron and nickel-iron and encourage the construction of first-class smelters such as nickel sulfate or stainless steel plants. Indonesia has repeatedly proposed to develop the local nickel industry chain and increase the added value of products, which may increase the probability of the implementation of export tax. At present, due to many factors such as the acceptance of the market and the time required for the implementation of the policy, it is unlikely that Indonesia will levy taxes in the short term, which is more about the impact on market sentiment.
