Nickel flow to Europe demonstrates Indonesia's control over global supply

European stainless steel producers are turning to Indonesia for nickel as booming production in the country forces plants in other countries to close.

Exports to Europe of Indonesian nickel pig iron - an ingredient for stainless steel used mainly by Chinese manufacturers - to Europe rose to 87,485 tons this year from just 1,006 tons in 2023, according to Indonesian government data. The Netherlands, Italy and the UK have taken deliveries, the data shows.

The rise in exports reflects Indonesia's growing dominance in the nickel market, which now accounts for more than half of global production. European plants typically use ferronickel, an alloy of higher purity than nickel-containing pig iron, but many plants that produce it have closed due to competition from Indonesia.

These include plants in New Caledonia and the Dominican Republic, which were previously major exporters of ferronickel to Europe. Meanwhile, imports from Russia, previously a major supplier of purer forms of nickel also used for stainless steel, were cut in 2022.

China's economic woes could also undermine demand for the metal and boost supplies to Europe as producers are forced to diversify. Asia's largest economy has long bought the lion's share of Indonesia's nickel, but stainless steel consumption there has been falling due to problems in the real estate and industrial sectors.