Indonesian nickel smelters without their own mines are facing growing problems – Indonesian government warns again of scarce nickel ore reserves and deteriorating nickel quality. US inflation continues to fall and overall inflation has more than halved since mid-2023.
Nickel shortage in Indonesia: smelters facing problems
Red alert for Indonesia’s nickel smelter industry?
Nickel smelters in Indonesia are facing a major problem: not enough raw materials! Septian Hario Seto, Deputy Minister in the Coordinating Ministry for Maritime Affairs and Investment, warns that the expected nickel production capacity of 2.2 million tons is putting smelters without their own mines in a tight spot. Scarce reserves and deteriorating ore quality are to blame. Our research team had already predicted it at the beginning of 2022: Indonesia is running out of nickel. Confirmation has now come once again from the highest level.
Rescue in sight? Mining on small islands
The Indonesian government and the House of Representatives are now planning to allow ore mining on small islands. New licenses are to remedy the shortage. But is this the solution?
Huge demand for nickel
The smelters need over 210 million tons of nickel-bearing saprolite ores every year and soon an additional 78 million tons of high-grade ores. The demand for low-grade ores with less Ni-content, which are easier to mine, rises to 57.5 million tons.
Government plays down problems
The Indonesian government is trying to play down the situation and points to new reserves. But are they really economically viable? Can they be tapped in time?
The big question: Will the reserves be enough?
Indonesia is at a crossroads: while the government is spreading optimism, the anxious question remains: will there be enough ore for the booming smelting industry? The future will show whether Indonesia can keep its nickel promise.
US inflation eases: Another ray of light on the horizon!
Inflation update from the USA: good news
Surprise on the US market: the latest data on consumer price inflation shows a slight decline. The annual overall inflation rate has fallen from 3.2 to 3.1 percent – thanks to falling energy prices.
Rising prices, but at a slower pace
Nevertheless, a small increase month-on-month: 0.1 percent more than in the previous month. Experts had expected stagnation, but were proved wrong.
Core inflation remains stubborn
Core inflation, excluding energy and food prices, remains stubbornly high: annualized at 4.0 percent, rising slightly to 0.3 percent on a monthly basis.
Inflation halved, but still high
Since January, overall inflation in the US has more than halved, but at 6.4% it is still well above the Fed’s 2% target. The reason: the tight US labor market and strong domestic consumption.
Fed stays on course: interest rates remain stable
Today, the Fed is expected to leave key interest rates at 5.25 to 5.50 percent and make it clear to the markets: no premature rate cuts! If market participants partially withdraw their rate cut expectations for 2024 after the Fed meeting, pressure on US government bonds could increase.
