Indonesia: Revised reference price formula pushes nickel ore prices higher

• Higher correction factor lifts domestic ore costs
  
  
• Domestic nickel ore prices surge nearly 67%
  
  

SteelDaily: Indonesia has raised its nickel Reference Metallic Price (HMA) for the first half of May 2026, further tightening raw material costs across the global stainless steel and nickel value chain after the country fully implemented its revised domestic nickel ore pricing mechanism (HPM) in April.

According to Indonesia's Ministry of Energy and Mineral Resources (ESDM), the May HMA for nickel increased 5.1% to $17,802/t from $16,934/t in late April. Cobalt HMA also rose by 5.2% to $55,854/t, while chromium and iron ore benchmark prices remained firm.

The latest increase has gained significant market attention as it coincides with the implementation of Indonesia's revised HPM calculation formula effective 15 April 2026. Under the revised mechanism, the correction factor (CF) used for domestic nickel ore pricing was increased sharply to 30% from around 17-18% previously for 1.6% nickel-grade ore.

Market participants noted that the revised formula has substantially increased domestic ore prices beyond the rise in benchmark HMA values alone. Based on current calculations for 1.6% nickel ore with 35% moisture content, Indonesian domestic ore prices reportedly increased to around $55.5/wmt from nearly $33/wmt earlier, marking an increase of almost 67% following the formula revision.

The revised pricing mechanism now directly incorporates the value of associated minerals such as cobalt, iron, and ferrochrome, further supporting higher ore valuations. Industry participants believe the move reflects Indonesias continued strategy to strengthen control over its nickel resources, improve miner profitability, and increase domestic value addition.

The sharp rise in ore costs is expected to increase production costs for nickel pig iron (NPI), ferronickel, and stainless steel producers operating in Indonesia. Several market participants noted that higher Indonesian ore prices are already lifting the cost base for downstream stainless steel products globally, particularly for 300-series and 316-grade stainless steel.

Meanwhile, rising nickel prices, tighter mining quotas, and ongoing discussions around royalty restructuring continue to support bullish sentiment across the stainless steel raw material market. Market participants expect elevated alloy costs to keep stainless steel prices firm in the near term, although weak downstream demand may limit aggressive price pass-through.

Outlook

Indonesia's revised HPM pricing mechanism is expected to remain a key driver for global nickel and stainless steel pricing trends in the coming months. Market participants will closely monitor further policy developments, mining quota allocations, and downstream production costs as tighter ore availability continues to reshape the global nickel supply chain.

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