CITIC Securities: Indonesia adjusts nickel ore HPM prices, nickel prices expected to rise

CITIC Securities research report pointed out that the Indonesian Ministry of Energy and Mineral Resources revised the pricing method for nickel ore, significantly increasing the pricing coefficient for nickel ore, and including cobalt and other associated ores in the weight. We calculate that this will result in a 221% / 93% increase in the prices of low-grade and high-grade laterite nickel ore HPM respectively, leading to an increase in the cost of nickel wet production capacity by $3,472 per ton, and an increase in the cost of nickel pyrometallurgical production capacity by $390-3190 per ton. We expect that if the Indonesian government strictly enforces the new HPM pricing mechanism, it will push up industry-wide costs. Coupled with the previous tightening of nickel ore quotas, the nickel price is expected to rise significantly. We predict that leading companies with guaranteed raw material supply will benefit from this.