16 January 2023 – Production at an Indonesian nickel smelter has had to be suspended for the time being following serious unrest that left two people dead at the weekend. Alumina production in Australia significantly reduced due to gas shortage. And copper prices pull. Indonesian copper export ban from the middle of the year? Raw material inventories halved from 2021 to 2022.
Unrest at Indonesian nickel plant
Severe unrest broke out at an Indonesian nickel plant over the weekend. The plant, which is said to belong to the Chinese Jiangsu Delong Group, suffered two deaths, according to official reports. The riots broke out during protests against poor working conditions.
Production at the nickel smelter, which can process 1.8 million tonnes a year, has been halted for the time being, according to officials.
Indonesian nickel a growing problem for European buyers?
The unrest over poor working conditions and severe environmental damage caused by the massive mining of Indonesia’s nickel ore deposits could become a significant problem, especially for European and American companies. Working conditions and environmental problems are a critical factor, especially for European customers.
Alumina supply restricted
In Australia, the Alcoa Kwinana Alumina Refinery in Western Australia had to reduce its production by 30% due to gas shortages. There could also be a possible force majeure at the plant, according to media reports. Overall, this incident is likely to push Alumina production into supply deficit and drive prices.
Indonesia wants to stop bauxite exports from June 2023. Indonesia is not a major bauxite exporter, but this could still affect alumina availability.
Alumina prices have increased by a good 5% since last year. Alumina prices have risen even more sharply since October 2022 and have increased by more than 20% to date.
Copper prices important economic indicator
Copper is considered an important indicator for the development of the global economy. The view to China and the easing of the Corona pandemic there, a probable export ban on Indonesian copper, have driven up copper prices considerably in recent weeks. Since October 2022, the price of copper has risen by more than 23% and is currently back above $9,000 a tonne.
Indonesia is considered one of the countries with the largest known copper reserves and wants to process more copper in the domestic downstream industry in the future.
Raw materials in short supply, further price increases to be expected
This positive trend should also have an impact on the prices of other raw materials such as nickel and steel. Taiwanese steel producers, for example, are already talking about price increases, which are to be announced after the Lunar New Year festival. In addition, media reports point out that the base metal stocks on the London Metal Exchange in 2022 were only half as large as in 2021.
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