The Nickel Paradox: Low Prices vs. Expanding Smelter Capacity
Explaining why Indonesian producers continue to ramp up output despite global surplus.
LME nickel has shed almost a third of its value over the past year, yet Indonesia keeps building. Five new RKEF lines are slated to come online before year-end in Central Sulawesi alone, adding roughly 500,000 tonnes of refined capacity to an already saturated market.
The paradox dissolves once the integrated structure of Indonesia's downstreaming model is understood. Most new capacity is captive — built and financed by integrated producers whose margins are calculated across the full chain from ore to chemical precursor.
For these players, a soft LME price is unwelcome but survivable. For independent miners and smaller smelters reliant on spot pricing, the picture is bleaker.
