Nickel is surging after Indonesia said it will ban exports of the metal from January
- Nickel prices surged to a five-year high on Monday after Indonesia said it would ban exports of nickel ore from January 1, 2020.
- Indonesia's move comes two years earlier than expected, as Jakarta aims to build up local resources.
- The southeast Asian country is the second-largest producer of nickel ore in the world, behind the Philippines.
- Watch nickel trade live.
Nickel prices surged by around 4% to a five-year high on Monday after the Indonesian government announced it would ban exports of nickel ore from January 1, 2020.The move by the Indonesian government comes two years earlier than expected, according to Al-Jazeera, as Jakarta aims to build up its local nickel industry.Advertisement
Nickel climbed to a five-year high of $18,785 on the London Metal Exchange after the ban was announced. The metal is commonly used to make rechargeable batteries, stainless steel, and corrosion-resistant alloys.
Bambang Gatot Ariyono, the director of Indonesia's mining ministry for coal and minerals, told reporters that the ban applies to all grades of nickel ore and that all exporters should cancel contracts dated beyond the start of the new year."We already exported 38 million tons up until July this year," Bambang said at a press conference on Monday, the Jakarta Post reported. "At this rate, we would need to think about our reserves especially if we keep issuing exports permits."
Most of Indonesia's nickel exports go to China, where they're processed into nickel pig iron, a cheaper alternative to nickel pig iron, according to the Financial Times.The move will create a gap in the nickel market of 100,00 tonnes a year, Colin Hamilton, a managing director of commodities research at BMO Capital Markets, told the FT. "This cuts off one of the major sources of raw material to the Chinese nickel pig iron industry."Nickel was trading at $18,623 at the time of writing. Goldman Sachs analysts predict the export ban could drive its price up another 7% to $20,000 a ton by the end of the year, the FT said.Advertisement