A Major Shock to Global Stainless Steel Costs & Impacts on the Entire Industrial Chain
The core of the new policy lies in comprehensive pricing of four elements + doubled correction coefficient. Costs of wet-process nickel ore have surged sharply, pushing up global stainless steel raw material costs by 5%–8%. Domestic ferronickel and electrolytic nickel costs have risen in tandem, intensifying cost pressures for leading enterprises including Tsingshan Group. The underlying cost support floor for stainless steel has moved higher, and the industry has entered a new landscape of rigidly rising costs amid weak demand matching.
I. Core Rules of the New Policy (Officially Effective April 15, Indonesian Ministry of Energy and Mineral Resources Decree No.144.K/MB.01/MEM.B/2026)
| Adjustment Dimension |
Old Rules |
New Rules |
Direct Impact |
| Correction coefficient (1.6% nickel grade ore) |
17% |
30% (+76% increase) |
Taxable base for ore with the same nickel content nearly doubles directly |
| Pricing elements |
Nickel (Ni) only |
Comprehensive pricing of Ni+Fe+Co+Cr four elements |
End of the era of free associated minerals; rigid upward cost pressure |
| Grade linkage coefficient |
None |
For every ±0.1% change in nickel grade, coefficient changes inversely by ±1% |
Premium for high-grade ore; higher costs for low-grade ore |
| Pricing unit |
USD/dry metric ton |
Unified to USD/wet metric ton |
Moisture content directly affects settlement price; wet-process ore suffers the heaviest impact |
Key Details
Thresholds for associated mineral pricing: Cobalt ≥0.05% (CF=30%), Iron ≤35% (CF=30%), Chromium (CF=10% unconditionally) are all included in taxation.
Wet-process nickel ore (MHP) bears the brunt: Adopts fixed-price taxation. Under new rules, HPM settlement price is significantly higher than market spot price, with a far larger cost increase than pyrometallurgical processes.
Pyrometallurgical ferronickel (NPI): Settled on the basis of HPM + premium + bonus, with taxation only covering the HPM portion. Impacts are relatively mild, yet overall costs still rise.
II. Cost Transmission: Wet-process Nickel Ore Hardest Hit, Full Stainless Steel Chain Cost Surge
1. Skyrocketing Raw Material Costs (Core Impact)
- Wet-process nickel ore (MHP): Costs rise by 18%–24%. The cost line for MHP-to-electrolytic nickel production is pushed up to around USD 21,000/ton, leaving no profit margin.
- Pyrometallurgical ferronickel (NPI): Costs rise by 5%–9%. Indonesian ferronickel costs increase to USD 15,320 per nickel ton, directly pushing up costs of 300-series stainless steel by approximately 10%–15%.
- Domestic ferronickel & electrolytic nickel: Smelters relying on imported Indonesian nickel ore see costs rise by 5%–8%. Small and medium-sized plants without self-owned mineral resources are squeezed nearly to break-even point.
2. Stainless Steel Finished Products: Higher Cost Floor, Prices Biased to Rise Rather Than Fall
- 304-series stainless steel: Overall costs increase by 8%–12%. Based on current spot price of RMB 14,500/ton, the cost floor rises to RMB 13,000–13,500/ton, making a breakdown difficult.
- 201/400-series stainless steel: Costs rise by 3%–5%, yet with weaker demand and lower price elasticity, supported mainly by cost floors.
Core logic: Cost side forms strong rigid support. However, amid sluggish global demand (destocking in Europe and America, weak domestic real estate sector), prices cannot achieve a trending rise. The market features rising costs + volatile price movements.
III. Impacts on Leading Enterprises Including Tsingshan: Mounting Cost Pressures & Market Concentration Among Industry Leaders
1. Dual Pressures on Tsingshan Group
- Weakened self-owned resource advantages: Higher official benchmark prices for Indonesian nickel ore under the new policy mean even self-owned mines must be settled at the new HPM price, bringing rigid raw material cost increases.
- Severe impact on wet-process capacity: Tsingshan holds a high proportion of wet-process capacity, with cost increases exceeding 18%, forcing a short-term cut in capacity utilization.
- Compressed profit margins: Profits of integrated projects are eroded. Profitability can only be maintained via cost reduction (energy & process optimization) or price hikes.
2. Industrial Restructuring
- Enhanced advantages for leaders: Enterprises with self-owned mines and deep integration into Indonesia’s supply chain (such as Tsingshan) capture market share via cost advantages, further lifting industrial concentration.
- Industry reshuffling for SMEs: Small smelters without resources and relying on external raw materials face cost inversion, production cuts or exit risks.
- Global supply chain relocation: Enterprises accelerate deployment in low-cost nickel regions including the Philippines and New Caledonia to hedge against Indonesian policy risks.
IV. Four Core Impacts on the Stainless Steel Market
- Higher price center: The spot floor price of 304-series stainless steel rises from RMB 13,000 to around RMB 14,000/ton, moving up the whole volatility range and capping downside space.
- Differentiated inventory structure: Social inventories keep accumulating (six major markets inventory at 94,090 tons as of April 17, a weekly increase of 2,260 tons). Downstream buyers only purchase on rigid demand without stockpiling, resulting in sluggish transactions at high prices.
- Process route adjustment: High-nickel 304-series faces heavy cost pressure; low-nickel / nickel-free grades (201, 430) expand rapidly, with product structure shifting toward low-cost varieties.
- Changes in trade flows: Rising export costs of Indonesian stainless steel reduce China’s imports, while domestic steel products are diverted to emerging markets such as India and Africa.
V. Conclusion: Rising Costs Form Strong Support, Weak Demand Is the Biggest Constraint
This new policy marks a key step in Indonesia’s resource monetization. A short-term seismic cost shock is inevitable, and a higher stainless steel cost floor has become a settled trend. Nevertheless, amid sluggish global steel demand (Worldsteel forecasts only 0.3% global demand growth in 2026) and continuous destocking in Europe and America, prices have little room for sharp increases. The overall market operates in a pattern of cost-supported, volatile and weak performance.
