Indonesia wields a big stick of export tax, nickel metal reacts instantly! LME nickel prices rebounded nearly 3% in response.

After Trump released signals for US-Iran negotiations and pushed market risk appetite to rebound, as well as the world's largest nickel-producing country Indonesia agreed to impose export taxes on this battery metal, nickel prices responded by rising. According to Indonesian Finance Minister Purbaya Yudhi Sadewa, President Prabowo Subianto has approved tariffs on coal and nickel exports on Wednesday, causing London Metal Exchange (LME) nickel futures trading prices to rise by 2.7%. The minister stated that discussions are still ongoing regarding the specific tax rates. Since the "LME nickel price epic short squeeze period in 2022", the LME nickel prices, which have been in a long-term slump, have been following the rebound trajectory of copper and aluminum since December 2025. Indonesia, a resource-rich Southeast Asian country, has been considering imposing windfall taxes on commodities recently, mainly due to the US and Israel-initiated Iran war causing a significant increase in oil and natural gas prices, leading to increasing pressure on the country's fiscal budget. As a net importer of crude oil and fuels, Indonesia has long been vulnerable to potential inflation and economic growth pressure caused by geopolitical conflicts disrupting energy flow interruptions. Throughout Indonesia's history, the country has had ambitions to move upstream in the value chain of resources by significantly increasing export thresholds for all raw materials and promoting investments in metal processing processes. Discussions on specific policies regarding taxing nickel exports can be traced back to the consideration of former President Joko Widodo in 2022; at that time, he hoped to attract battery and electric vehicle manufacturers using nickel metal to invest. In a recent period of geopolitical conflicts depressing LME nickel prices, they have remained soft, but finally rebounded on Wednesday under the driving forces of US ceasefire signals and Indonesian tax initiatives. By around 8 am London time, LME nickel prices rose by 2.1% to $17,310 per ton. Currently, Indonesia's nickel production accounts for more than half of global production, and nickel is also one of the country's main export revenue-generating commodities. Much of the growth and expansion of the nickel metal industry has been strongly driven by Chinese investments, mainly due to nickel being used primarily in stainless steel and electric vehicle batteries, two key industries that China has focused on for growth in recent years. Copper is widely used in several sectors such as power, renewable energy transformation, traditional construction, industrial machinery, transportation, communication, data center construction, and many others, which are core to global economic activities, hence copper is called the "Doctor Copper." Unlike the strong demand for copper and aluminum from the global tech giants such as Google, Microsoft, Amazon, under the backdrop of a massive wave of AI data center construction or expansion, the current industry prosperity corresponding to nickel demand is completely unable to catch up with copper and aluminum. In the era of artificial intelligence and digital transformation, the construction of ultra-large-scale AI data centers has led to explosive growth in copper demand. The high-speed interconnection systems of copper cables for power transmission and computing clusters, as well as the cooling systems and high-performance electronic devices in the large AI data centers being built by Microsoft, Google, Amazon, and Meta, heavily rely on copper. This structural new demand in data center additions is gradually becoming a new demand growth engine for the copper market, while aluminum is more of a "secondary beneficiary" of the substitution effects under rising copper prices in the power grid equipment side. According to the International Nickel Study Group (INSG), in 2023, of the global primary nickel consumption, stainless steel accounts for approximately 65% and batteries account for about 16%. This means that the prosperity of nickel depends more on stainless steel demand (related to real estate/manufacturing cycle) and EV (electric vehicle) battery chemical technology routes and EV sales growth, rather than the AI computing industry chain, which has the highest global industry prosperity. Although the long-term demand for electric vehicles under energy transition trends remains significant, at present, the focus of the commodity market trading is clearly not on the level of EV transformation. Gao Yin, an analyst from Shuohe Asset Management, stated that considering Indonesia's current financial difficulties, investors are now more likely to believe in this plan. She mentioned that higher tax burdens will also increase production costs and nickel prices.