Over the past few days, the Indonesian nickel market has reacted to the government’s announcement of a restricted 2026 RKAB production quota, set at approximately 260–270 million tons. This reduction has sent shockwaves through the industry, sparking widespread concern among both operational and upcoming smelters. Stakeholders are increasingly worried that these tightened supply levels will be insufficient to sustain their long-term production requirements. For the first one, The Indonesian Nickel Miners Association (APNI) has stated that the Ministry of Energy and Mineral Resources (ESDM) has agreed to consider revisions to the 2026 Work Plan and Budget (RKAB) starting in July. It is believed that the RKAB revisions could increase nickel production quotas by 25% to 30%. According to APNI, the domestic smelter demand based on the capacity is around 380-400 million tons, With the existing RKAB quota at 270 million tons and projected imports from the Philippines at 23 million tons, this 30% adjustment is critical to meeting the national ore deficit. This potential for more quota provides some relief to the market, but there is a second, more pressing issue to consider Another media also stated that The Indonesian Ministry of Energy and Mineral Resources (ESDM) has set a conservative nickel ore production target of 209.08 million tons for 2026, a figure notably lower than the approved RKAB quota of 260–270 million tons. According to Siti Sumilah Rita Susilawati of the Directorate General of Minerals and Coal, this strategic reduction is intended to preserve national reserves and stabilize global commodity prices As a result, the sudden perception of even deeper quota cuts has fueled confusion across the Indonesian market, which might further intensifying the pressure from already spiking nickel ore prices. I. Indonesia’s Calculated Nickel Ore Demand in 2026 According to SMM’s latest calculations, the total nickel ore requirement for 2026, which includes the demand from NPI, FeNi, Nickel Matte, and MHP, is estimated at approximately 334 million tons, based on the production estimates of smelter's current condition. This sharp increase is primarily driven by the rapid expansion of MHP production, which utilizes higher volumes of limonite ore. This surge in consumption has intensified the pressure on smelters to secure significantly higher mining quotas. II. Current Update and Understanding The Quota Revision? According to current understanding from the Regulation of the Minister of Energy and Mineral Resources Number 17 of 2025, citing the 11 th Article Regarding the Amendment of Work Approved Quotas in ESDM, it is stated that: Article 11 (1) Holders of an IUP (Mining Business License) for the Exploration stage, holders of an IUPK (Special Mining Business License) for the Exploration stage, holders of an IUP for the Production Operation stage, holders of an IUPK for the Production Operation stage, or holders of an IUPK as a Continuation of Contract/Agreement Operations may submit one (1) application for an amendment to the Exploration stage RKAB or the Production Operation stage RKAB in each current year. (2) The application for the RKAB Amendment as referred to in paragraph (1) shall be submitted after the holders of the Exploration stage IUP, Exploration stage IUPK, Production Operation stage IUP, Production Operation stage IUPK, or IUPK as a Continuation of Contract/Agreement Operations have submitted periodic reports up to the second quarter or no later than July 31st of the current year. SMM observes that RKAB revisions and amendments are standard procedure, as seen in both 2024 and 2025. This year, however, the submission window for revisions is expected to open after June, with a final deadline of July 31st. While the ESDM has not clarified whether the 260–270 million ton target already accounts for these mid-year adjustments, it remains highly likely that these revisions will be sufficient to meet domestic smelter demand. Another Potential Cuts? According to SMM’s further communication with ESDM, the predicted quota for 2026 still remains on 260-270 million tons estimate. Since the further production cuts rumor by ESDM is not in an official setting announcement, it is hereby confirmed that the quota approved of 2026 will not be lower than ESDM’s initial estimate of 260-270 million tons. From SMM's understanding, the target number to be lower than the quota is merely just an estimate of the production target, not necessarily reflecting the actual production numbers. III. Nickel Ore Supply and Demand Given the government’s push to tighten annual quotas, SMM expects this year’s revisions to land at approximately 20%, a more conservative number. Furthermore, nickel ore imports from the Philippines are unlikely to see significant growth compared to 2025, with estimates holding at approximately 19 million tons. This stagnant growth is due to the heavy concentration of Philippine exports to China, coupled with limited domestic mining capacity and a lack of new mining companies . After factoring in import volumes from the Philippines, the nickel ore market is likely to remain in a tight supply-demand balance, especially with potential hurdles like the rainy season slowing down mining operations. Nonetheless, this scenario is much more realistic than the alternative: a massive 50+ million ton deficit that would occur if the total quota were strictly capped at 270 million tons. IV. Conclusion Overall, the signal for significant quota cuts at the start of the year has already triggered a sharp rally in nickel ore prices, which could be seen from the substantial rise in premiums, largely driven by quota reductions at major mining companies and persistent uncertainty among small-to-mid-scale operators. Looking ahead, if the government maintains these restricted levels and fails to approve adequate supplemental quotas, domestic ore prices are poised for further upward momentum, potentially intensifying the cost burden on the downstream smelting sector.

This week, imported iron ore prices exhibited a fluctuating trend within a narrow range, primarily influenced by a weakening macroeconomic outlook and pressure on fundamental factors. In the market, news of the China-US London negotiations led to a shift in tariff expectations from strong to weak, undermining support in the futures market. On the supply and demand front, global iron ore shipments increased slightly, with port arrivals rising by 2.21 million mt MoM, significantly intensifying supply pressure. On the demand side, the situation continued to weaken due to a decline in daily average pig iron production and the onset of the rainy season in south China. Apparent demand for rebar further contracted, prompting some steel mills to begin reducing pig iron output. The imbalance between strong supply and weak demand led to a slight inventory buildup at ports. Additionally, the rapid contraction of the spot-futures price spread for PB fines, driven by strong selling intentions among traders, further suppressed the upward momentum of futures. In terms of port spot prices, the weekly average price of PB fines at Shandong ports fell by 8 yuan/mt MoM. Chart-: SMM 62% Import Ore MMi Index Source: SMM This week, domestic ore prices declined slightly, and it is expected that domestic ore prices will continue to edge down slightly next week. In Hebei's Tangshan, Qian'an, and Qianxi regions, prices fell by 1-5 yuan/mt, while in west Liaoning's Chaoyang, Beipiao, and Jianping regions, prices also dropped by 1-5 yuan/mt. In east China, prices decreased by 5-10 yuan/mt. In the Tangshan region of Hebei, iron ore concentrate prices remained generally stable, with the 66% grade dry-basis tax-inclusive delivery-to-factory price still holding at 915-920 yuan/mt. Both supply and demand sides maintained a wait-and-see sentiment, with trading activity remaining sluggish. Overall operating rates at mines and beneficiation plants remained relatively low. Major mines still maintained profits of 100-200 yuan/mt, while concentrate plants were mostly operating at a loss. Overall resources remained relatively tight. On the demand side, local steel mills have recently begun formulating annual maintenance plans, weakening demand support. Moreover, their demand for domestic iron ore concentrates is primarily based on purchasing as needed, resulting in a situation of weak supply and demand in the market. In the domestic ore market of west Liaoning, transactions were weak, and prices fluctuated slightly downward, with the 66% grade iron ore concentrate wet-basis ex-factory price (tax excluded) at 680-690 yuan/mt. Local raw ore resources were scarce, with most mine resources being supplied to their own beneficiation plants. Independent beneficiation plants in the region faced difficulties in externally purchasing raw ore, resulting in relatively high procurement costs. Coupled with the current weak market conditions, a small number of producers chose to halt production for maintenance due to low shipping profits. On the demand side, some local steel mills experienced losses, and their demand for iron ore was primarily based on purchasing as needed, resulting in generally weak market transactions. In east China, the overall production at mines and beneficiation plants of iron ore concentrates remained relatively stable. Following previous sales promotions, shipping conditions improved, leading to a slight decrease in overall inventory. However, the overall cost-effectiveness of domestic iron ore concentrates remained relatively weak. Chart-: Price Spread Between Domestic and Imported Ores Source: SMM Looking ahead to next week For imported ore: The iron ore market is expected to maintain a pattern of in the doldrums, with bullish and bearish factors intertwined. On the supply side, overseas shipments remain at a seasonal high. However, due to the impact of typhoon weather in south China, port unloading efficiency may be constrained, and the increase in port arrivals is expected to narrow. On the demand side, the daily average pig iron production continues to decline slightly. Coupled with the persistent rainfall in south China, which suppresses end-user steel demand, steel mills' procurement remains focused on restocking based on demand. Currently, the structure of high pig iron production and low inventory still provides some support for ore prices. However, the characteristics of the industry's off-season are evident, and market sentiment is generally pessimistic. From a macro perspective, the uncertainty surrounding China-US tariff policies continues to disrupt market expectations, causing traders to operate more cautiously. Overall, against the backdrop of weak supply and demand, iron ore prices are expected to continue fluctuating rangebound and in the doldrums next week, with the fluctuation range possibly narrowing further. Close attention should be paid to the actual impact of typhoons on logistics and adjustments to production schedules in response to changes in steel mill profits. From the perspective of domestic ore: Overall, the cost-effectiveness of domestic iron ore concentrates remains relatively weak. Although supply is currently tight, there has been no significant improvement in demand. Coupled with the recent impact of external steel tariff-related factors, overall market confidence is weak. It is expected that the price of domestic iron ore concentrates will continue to fluctuate rangebound and in the doldrums next week. 》Click to view the SMM Metal Industry Chain Database

This week, the prices of imported iron ore first declined and then rebounded. During the Dragon Boat Festival holiday, the US White House announced that it would increase tariffs on imported steel, aluminum, and their derivatives from 25% to 50%. This news heightened market concerns about the uncertainty of steel exports, leading to the spread of pessimistic sentiment. However, as the US and Chinese heads of state held a phone call on Thursday night, releasing positive signals and confirming that the existing tariff policies would remain unchanged, market sentiment was significantly boosted. From a fundamental perspective, the supply side showed a contractionary trend, with global iron ore shipments and port arrivals declining simultaneously last week, and the supply increase falling short of expectations. The demand side remained relatively resilient. Although pig iron production continued to decline slightly, the absolute value still maintained a high level of over 2.4 million mt/day. Coupled with the continuous slight destocking at ports, the supply-demand pattern supported prices. Under the dual influence of easing macro policies and fundamental support, iron ore prices completed the transition from weakness to strength, showing an overall pattern of fluctuating rangebound. In the spot market, the weekly average price of PB fines at Shandong ports dropped slightly by 7 yuan/mt MoM. Chart-: SMM 62% Import Ore MMi Index Data source: SMM This week, domestic ore prices declined slightly, and it is expected that domestic ore prices will still have room to decline next week. In Hebei's Tangshan, Qian'an, and Qianxi regions, prices fell by 5-10 yuan/mt. In west Liaoning, prices in Chaoyang, Beipiao, and Jianping dropped by 1-5 yuan/mt. In east China, prices fell by 50-55 yuan/mt. The supply and demand in the iron ore concentrates market in Tangshan, Hebei, were in a wait-and-see mode, with relatively stable prices. The dry-basis, tax-inclusive delivery-to-factory price for 66% grade iron ore concentrates was 920-930 yuan/mt. Overall market transactions were sluggish. Local independent beneficiation plants faced losses and shipping pressure, and production shutdowns for maintenance were common. The cost-effectiveness of domestic iron ore concentrates declined, and steel mills mainly purchased as needed. Amid weak supply and demand, there was no significant pricing activity in the market. The domestic ore market in west Liaoning was sluggish. Affected by the price-driving actions of local leading steel enterprises and the continuous weakness of the market, the ex-factory prices of 66% grade wet-basis, tax-exclusive iron ore concentrates in the region were 690-700 yuan/mt. Currently, traders lack confidence in the future market and have low purchasing enthusiasm. Considering the limited profit margins, their offers are generally low. Mines and beneficiation plants, considering the relatively high cost support for iron ore concentrates, have temporarily halted shipments. Overall, market trading sentiment is weak. Most mines and beneficiation plants in east China are operating normally as planned, but recent shipping conditions have been average. The cost-effectiveness of domestic ore has shown a weakening trend, and overall market transactions have been relatively sluggish. From a pricing perspective, the average price index of imported ore this week declined slightly WoW, and it is expected that local iron ore concentrate prices will still have some room to decline. Chart: Price Spread Between Imported and Domestic Ores Source: SMM Outlook for Next Week Imported Ore Perspective: Looking ahead to next week, the iron ore market is expected to exhibit a pattern of weak supply and demand, yet with underlying support remaining. From the supply side, despite the anticipated rebound in global shipments, the efficiency of port operations will be significantly constrained by the persistent heavy rainfall in South China, and the actual port arrivals are expected to remain at a low level. On the demand side, influenced by seasonal maintenance, the operating rate of blast furnaces at steel mills may continue to drop back slightly. However, considering that pig iron production will still be maintained at a relatively high level of over 2.4 million mt/day, the support from end-use demand for ore prices remains strong. From a macro perspective, with the marginal easing of Sino-US tariff issues and the rising expectations for domestic growth-stabilizing policies, particularly the potential support measures in infrastructure investment and consumption stimulus, the market's risk appetite is expected to improve further. Overall, driven by multiple factors such as short-term supply constraints, persistent demand resilience, and an improved macro environment, iron ore prices are expected to fluctuate upward next week, with room for a slight rebound. Domestic Ore Perspective: In summary, the supply of domestic iron ore concentrates remains tight. However, influenced by cost-effectiveness, steel mills are mainly purchasing as needed, leading to weakened demand. Coupled with the recent weak trend in the iron ore futures market, it is expected that the prices of domestic iron ore concentrates may have some room to decline. 》Click to View SMM Metal Industry Chain Database

This week, the imported iron ore market exhibited a fluctuating trend, with the price center gradually shifting downward. Early in the week, market sentiment improved on expectations of demand growth, fueled by monetary easing signals such as the LPR cut. However, the State Council meeting on Thursday focused on the technology sector, providing limited support to ferrous metals. Market sentiment remained weak. Supply-side disruptions, including adjustments to mining rights in Guinea and a port accident in Peru, briefly pushed up ore prices. However, seasonal weakness in end-use demand and a continuous decline in apparent consumption ultimately suppressed prices, causing them to weaken again. The spot market performed relatively steadily. Taking PB fines at Shandong ports as an example, the weekly average price fell by 8 yuan/mt WoW. Chart-: SMM 62% Imported Ore MMi Index Source: SMM This week, domestic ore prices showed mixed performance. It is expected that domestic ore prices may decline slightly next week. In Hebei's Tangshan, Qian'an, and Qianxi regions, prices fell slightly by 1-5 yuan/mt. In west Liaoning, prices in Chaoyang, Beipiao, and Jianping remained basically stable. In east China, prices increased by 20-30 yuan/mt. In Tangshan, Hebei, iron ore concentrate prices remained relatively stable. The dry-basis, tax-inclusive delivery-to-factory price for 66% grade ore was 935-940 yuan/mt. Overall market transactions were sluggish, with traders operating cautiously. Coupled with steel mills driving down prices, their operating space was extremely limited, resulting in a strong wait-and-see sentiment. In beneficiation, operations did not improve, with this being particularly evident in Zunhua and Qianxi. Some beneficiation plants halted production due to difficulties in sourcing raw materials and high costs, leading to a low supply of concentrates and strong support for local prices. In west Liaoning, the domestic ore market remained generally stable. The wet-basis, tax-excluded ex-factory price for 66% grade ore was 705-710 yuan/mt. Most producers refused to budge on prices, but weak downstream demand and recent weakness in steel prices made traders cautious about inquiries and more inclined to offer low prices. In beneficiation, recent land and safety inspections have affected production at some beneficiation plants. Local iron ore concentrate resources remain tight, providing some support for local ore prices. Steel mills are also mainly purchasing as needed, with ongoing competition between sellers and buyers in the market. In east China, most beneficiation plants are operating normally as planned. However, overall market transactions are relatively sluggish, with some beneficiation plants facing inventory accumulation issues and formulating relevant sales promotions. Currently, steel mills are maintaining low inventory levels, with overall purchases mainly made as needed. Chart-: Price Spread Between Imported and Domestic Ores Source: SMM Looking ahead to next week For imported ore: The iron ore market will maintain a pattern of weak supply and demand. On the supply side, weather disruptions in Australia have limited shipments from Port Hedland, but a slight rebound in port arrivals has kept overall supply stable. On the demand side, with an increase in regular maintenance at steel mills, the daily average pig iron production is expected to continue to decline by 10,000 mt. It is worth noting that the high level of steel exports has partially offset the weakness in domestic demand. Coupled with the expectation of coke price cuts, which has improved the profit margins of steel mills, there is insufficient motivation for voluntary production cuts, providing some support for ore prices. Overall, under the influence of weak industry expectations, ore prices are expected to continue facing downward pressure next week, exhibiting a narrow and fluctuating trend in the doldrums. From the perspective of domestic ore: In general, the resources of domestic iron ore concentrates remain in a tight supply trend, providing some support for overall ore prices. Given the current profit margins of steel mills, their desire to bargain down prices remains strong. It is expected that the prices of domestic iron ore concentrates may decline slightly next week. 》Click to view the SMM Metal Industry Chain Database

This week, the imported iron ore market surged significantly before pulling back slightly. On Monday, the "Joint Statement of the China-U.S. Geneva Economic and Trade Talks" was released, with both sides agreeing to substantially reduce bilateral tariff levels and each retaining a 10% tariff. Since February, market sentiment regarding tariff wars has improved significantly, stimulating a sharp rise in iron ore futures. Subsequently, a port equipment accident at a Peruvian iron ore company, requiring 4-5 months of repairs, raised market concerns about future supply reductions, pushing iron ore prices to new highs. However, from a fundamental perspective, port arrivals increased slightly this week, while daily average pig iron production fell by 17,000 mt this week, starting to decline from high levels. Iron ore demand pulled back slightly, suppressing spot prices and significantly narrowing the futures-spot price spread. Regarding port prices, the price of PB fines in Shandong rose by 15 yuan/mt WoW. Chart: SMM 62% Import Ore MMi Index Source: SMM Domestic ore prices rose slightly this week, and it is expected that domestic ore prices may continue to rise next week. Among them, prices in Tangshan, Qian'an, and Qianxi areas of Hebei increased by 5-10 yuan, while prices in Chaoyang, Beipiao, and Jianping areas of west Liaoning, as well as in east China, increased by 1-5 yuan/mt. Iron ore concentrate prices in Hebei remained relatively stable, with the dry-basis, tax-inclusive delivery-to-factory price of Fe66% iron ore concentrates in the Tangshan area ranging from 945-950 yuan/mt. Currently, mines and beneficiation plants have a strong sentiment to stand firm on quotes, with a strong short-term bullish sentiment and no urgency to sell. According to SMM tracking, there have been no maintenance operations at steel mills' blast furnaces recently, and pig iron production remains at a relatively high level, providing some support for local iron ore concentrate demand. Iron ore concentrates in west Liaoning rose slightly, with the wet-basis, tax-exclusive ex-factory price of 66% grade iron ore concentrates ranging from 710-720 yuan/mt. Local safety inspection efforts have weakened, and previously halted mines and beneficiation plants have gradually resumed production, slightly alleviating the short-term supply tightness trend. On the steel mills' side, purchasing as needed is currently the main approach. Recently, there have been market rumors about crude steel production restrictions at local steel mills, but according to SMM's current tracking, the possibility of production restrictions in the short term is low, providing some support for local iron ore concentrates. In east China, most mines and beneficiation plants are currently operating normally as planned, selling as they produce. Some mines and beneficiation plants are facing certain inventory pressure, and local steel mills are mainly purchasing as needed, with overall market transactions slowing down. However, from a pricing perspective, the average price index of imported ore rose slightly WoW this week, and it is expected that there may be some upside potential for local iron ore concentrate prices next week. Chart: Price Spread Between Domestic and Imported Ores Source: SMM Outlook for Next Week For imported ore: Recently, overseas shipments have been at a moderately low level. Affected by the port accident in Peru, it is expected that overseas shipments will have limited improvement next week. The overall supply pressure is relatively small. According to SMM's blast furnace maintenance plan, the daily average pig iron production is expected to decline by approximately 10,000 mt next week. Although pig iron production has started to weaken, the overall decline is relatively small, and production remains at a high level. The demand for iron ore continues to support ore prices. Considering the suspension of China-US tariffs and the relaxation of steel export restrictions, which are positive for the entire ferrous industry chain, market sentiment is expected to remain optimistic. SMM expects iron ore prices to continue to hold up well next week. However, the policy to reduce crude steel production has not yet been implemented, which will still exert downward pressure on ore prices. From the perspective of domestic ore: Overall, the fundamental situation of domestic iron ore concentrates is relatively stable. In terms of news, the China-US tariff negotiations have been relatively smooth, boosting overall market confidence. Coupled with the strengthening of the futures market for imported iron ore, it is expected that domestic iron ore concentrate prices may have some upside potential next week. 》Click to view SMM Metal Industry Chain Database

This week, the imported iron ore market showed a trend of jumping initially and then pulling back, mainly influenced by the intertwining of bullish and bearish factors: the post-holiday State Council press conference released a package of financial favorable policies, briefly boosting market sentiment and driving futures prices to rise rapidly; however, subsequently, details emerged that steel mills in multiple provinces received verbal notices of crude steel production reduction, exacerbating demand-side concerns against the backdrop of already loose supply and demand for iron ore, coupled with the obvious weakening of end-use consumption and the expected inflection point of pig iron production, collectively leading to a maximum intraday drop of 2.05% in the most-traded I2509 contract. However, current pig iron production is at a yearly high, and the post-holiday restocking demand from steel mills has been released, keeping port spot cargo transactions active and spot prices strongly supported, causing the spread between futures and spot prices to further widen to 60 yuan/mt. In terms of port prices, the price of PB fines in Shandong dropped by 5 yuan/mt MoM. Chart: SMM 62% Imported Ore MMi Index Data source: SMM This week, domestic ore prices dropped slightly, and it is expected that domestic ore prices will continue to decline next week. This week, prices in Tangshan, Qian'an, and Qianxi in Hebei dropped by 5-10 yuan/mt MoM compared to pre-holiday levels, while prices in west Liaoning, Chaoyang, Beipiao, and Jianping were lowered by 5-10 yuan/mt; prices in east China were reduced by 10-15 yuan/mt. The price of Tangshan iron ore concentrates slightly decreased compared to pre-holiday levels, with the 66-grade dry basis tax-included delivery-to-factory price at 930-940 yuan/mt; currently, overall production at mines and beneficiation plants is relatively stable, but the overall resumption of production is slow, and local iron ore concentrate resources remain relatively tight, providing some support to local ore prices. Steel mills currently have no maintenance plans, and pig iron production in blast furnaces remains at a relatively high level, providing some support for the demand for iron ore concentrates, but steel mills are still mainly purchasing as needed, and the overall market transaction is sluggish. The market price of domestic ore in west Liaoning remained stable, with post-holiday restocking by local steel mills supporting the sentiment to stand firm on quotes at beneficiation plants. Local mines and beneficiation plants are affected by safety inspections, with overall operations at a low level, and the resource shortage situation is quite obvious, with a strong wait-and-see sentiment at mines and beneficiation plants. Steel mills are mainly purchasing as needed, and recently, there have been reports that steel mills in the northeast region have received notices of crude steel production reduction, intensifying market pessimism. In the east China region, mines and beneficiation plants are mostly producing normally as planned, selling as they produce, with no significant inventory pressure; some individual mines and beneficiation plants that had stopped production have resumed partial production, and production may increase in the later period, potentially alleviating the overall tight supply trend. Chart: Price Spread Between Domestic and Imported Ore Looking ahead to next week For imported ore: The iron ore market is expected to maintain a weak and fluctuating pattern: from a macro perspective, policies are in a window period, and the possibility of repeated negotiations on Sino-US tariffs requires close attention to related developments over the weekend that may affect market sentiment; fundamentally, there is a trend of weakening supply and demand, with overseas shipments entering the peak season cycle, and port arrivals are expected to increase MoM; against the backdrop of weakening end-use demand, steel mill maintenance plans are increasing, and SMM expects daily average pig iron production to pull back by around 10,000 mt.Under the dual pressures of increasing supply and weakening demand, ore prices are expected to remain in the doldrums. Key areas of focus include: 1) changes in apparent consumption; 2) the accumulation rate of inventories for the five major steel products. From the perspective of domestic ore: Overall, the overall supply of domestic ore remains tight. On the demand side, as the production of pig iron in blast furnaces at steel mills gradually decreases, the demand support for iron ore concentrates may weaken. Coupled with the current impact of tariffs and news about crude steel production cuts, it is expected that domestic iron ore prices will be in the doldrums with volatile movements next week. 》Click to view the SMM Metal Industry Chain Database