Affected by this, local stainless steel pipe mills in Indonesia have taken the lead in raising quotes by 3%, which may affect the trade pattern of the stainless steel industry chain in Southeast Asia and even the world in the short term.
Core Event: Dual Controls Lead to NPI Production Cut, Capacity Idle Rate Hits Second High This Year
According to the latest disclosure from Indonesia's Ministry of Energy and Mineral Resources, to meet the 2025 annual dual control targets for energy consumption, the country has implemented power restriction and production limitation measures on NPI smelters in major producing areas such as Sulawesi and Maluku, requiring high-energy-consuming smelting production lines to forcibly reduce load. The capacity utilization rate of single plants has dropped from 85% to 65%-70%.
At the same time, Indonesia's Forestry and Environmental Protection Working Group carried out joint special law enforcement, focusing on inspecting the tailings pond safety, wastewater discharge compliance and mine reclamation progress of NPI smelting enterprises. A total of 190 mining and smelting enterprises have been suspended or restricted from permits, among which 30 NPI plants have been temporarily shut down due to failure to meet environmental standards.
Industry data shows that Indonesia's NPI capacity idle rate has risen to 18% in December, an increase of 6 percentage points from November, and the monthly average NPI output has decreased by about 6,000 metal tons of nickel. This production cut scale has directly led to a short-term gap in the global NPI supply side.
It is worth noting that this production cut is not a temporary regulation. Indonesia has previously clearly suspended the issuance of new nickel smelting permits (including NPI/FeNi), and the 2026 RKAB (Mining Production and Operation Plan) quota will be significantly reduced. This production cut can be regarded as a landing signal of long-term policy tightening.
Chain Reaction: Nickel Price Soars 8.9%, 300-Series Bar/Wire Costs Surge
The tightness in NPI supply has directly transmitted to the nickel price market. From December 23 to 27, the London Metal Exchange (LME) nickel price rose rapidly from $15,200/ton to $16,560/ton, a cumulative increase of 8.9%; the main nickel contract on the Shanghai Futures Exchange also rose by 8.17% synchronously, from 117,000 yuan/ton to 127,000 yuan/ton, hitting a 9-month high.
For the stainless steel industry chain, 300-series stainless steel (including bars and wires) has an extremely high dependence on nickel, with nickel accounting for about 8%-10%. Industry calculations show that for every $1,000/ton increase in nickel price, the production cost of 300-series stainless steel bars and wires will increase by 600-800 yuan/ton. In December alone, driven by the rise in nickel prices, the production cost of 300-series stainless steel bars and wires has increased by 1,200-1,500 yuan/ton cumulatively, greatly squeezing the profit space of enterprises.
As a direct reflection of the industrial chain transmission, local stainless steel pipe mills in Indonesia have taken the lead in adjusting quotes. For pipe products using 300-series stainless steel bars and strip steel as raw materials, quotes have generally been raised by 3%, and the quote increase for some high-end pipes has reached 5% to hedge against the pressure of rising raw material costs.
Market Impact: Affecting Southeast Asian Trade, China's Exports Embrace Short-Term Opportunities
The impact of this production cut event on the global stainless steel trade pattern has initially emerged. As the main export destination of Indonesian stainless steel, Southeast Asia will face a situation of tight supply and rising prices of 300-series bars, wires and pipes in the short term. Some downstream manufacturing enterprises relying on Indonesian raw materials may turn to import channels.
For Chinese stainless steel export enterprises, this event brings short-term opportunities. On the one hand, China has sufficient production capacity of 300-series stainless steel bars and wires, and some enterprises have locked in long-term nickel price agreements in advance, with significant cost advantages; on the other hand, after the price increase of Indonesian products, the export quote competitiveness of Chinese products to the Southeast Asian market has improved. It is expected that the export orders of 300-series bars and wires from China to Vietnam, Thailand and other countries will show a month-on-month increase in January.
However, industry insiders remind that we need to be alert to the subsequent correction risk of nickel prices. If some production lines resume production after the end of Indonesia's environmental inspection, nickel prices may fall back, thereby affecting the stability of stainless steel product quotes.
Foreign Trade Response Suggestions
1. Quote Strategy: For Southeast Asian customers, moderately raise the quotes of 300-series stainless steel bars and wires by 2%-3%, and simultaneously provide evidence of cost increases (such as nickel price trends and Indonesian production cut announcements) to improve customer acceptance;
2. Inventory Control: Prioritize locking in long-term nickel price agreements, control the scale of raw material inventory, and avoid blind stockpiling leading to cost out of control;
3. Market Layout: Increase promotion efforts in the Southeast Asian market, focus on connecting with customers seeking alternative suppliers due to Indonesian price increases, and expand long-term cooperation;
4. Risk Avoidance: Closely monitor the progress of Indonesia's environmental inspection and capacity recovery, timely adjust quotes and order strategies, and hedge against market fluctuation risks.
