At about 4 p.m. on September 17, a strong news reported by foreign media said that Indonesia plans to set an export ban or tax on nickel, which will limit the export of nickel with content less than 40%. Affected by this news, LME nickel price rose to US $20295 / ton, with a maximum increase of more than 5%.

  Subsequently, another media interview with Indonesian investment minister bahlil lahadalia said that Indonesia is considering imposing export tax on nickel products with nickel content less than 70%, in order to promote the further refining of low nickel products to at least 70% in Indonesia, so as to promote the development of nickel battery industry chain.

  The need to extend Indonesias local nickel industry chain. From the previous single nickel ore producer to NPI smelting to the worlds second largest stainless steel producer, Indonesia only takes less than 10 years. At present, Qingshan and Delongs stainless steel production lines in Indonesia have been put into operation, forming a stainless steel production capacity of 5.5 million tons. In addition, baowutai will join hands with Xinhai to invest in ferronickel stainless steel in Indonesia, and Indonesias stainless steel territory will expand.

  In addition to stainless steel, Indonesia is also actively expanding the new energy vehicle industry chain. At present, all new wet process projects in the world are in Indonesia. In the next five years, Indonesia will build more than 500000 tons of wet process projects. In terms of expanding the downstream industry chain, LG Chemical, Indonesias first battery production enterprise, has also started in September 2021. The capacity of the battery plant is 10gwh, with a total investment of US $9.8 billion. Therefore, Indonesia is not satisfied with just a processing plant in the middle link, but points to the whole industrial chain.

  Therefore, Indonesia has the power to prohibit or restrict the export of nickel products. Lets analyze the feasibility and possible impact of this situation.

  It is unlikely to ban exports, and it is very likely to levy taxes. At present, Indonesias nickel products include high matte nickel, ferronickel, NPI and MHP newly put into operation this year. In terms of nickel content, the nickel content of high matte nickel is 75%, the nickel content of ferronickel is about 25%, the nickel content of NPI is about 12%, and the MHP is about 40%. If tariffs are imposed on products below 40%, NPI and ferronickel will bear the brunt. At present, Indonesia has formed a NPI capacity of more than 1 million tons. From the current NPI capacity and output of Indonesia, the monthly NPI output of Indonesia is 77000 tons, and Indonesias stainless steel can not fully digest its domestic NPI and ferronickel. Therefore, it is unlikely that Indonesia will prohibit exports, and it is very likely to levy tariffs on NPI. Of course, this part of the cost will eventually be paid by Chinese buyers, which will raise the production cost of stainless steel in China. On the other hand, due to the cost advantage of local stainless steel in Indonesia, considering that Chinas stainless steel industry is facing greater pressure on carbon emission reduction, Chinas stainless steel imports from Indonesia will show an increasing trend in the future.

  From the perspective of Taxation time, it is unlikely to levy tariffs at this stage. After all, it may take time to formulate, issue and implement policies. We think the Indonesian authorities will also communicate with Chinese enterprises. Whether it is taxation or carbon emission constraints, we have to face the fact that the nickel cost center will move up in the future, and the cheap nickel in Indonesia will become the past.