This week, ferrous metals retreated after a rapid rise. At the beginning of the week, the market said that Asia had shifted to coal-fired power generation due to a natural gas supply deficit, while Indonesia would increase coal production and impose export taxes. The rise in international coal prices was transmitted to China, and coking coal and coke led the gains in ferrous metals; mid-week, the Middle East situation remained volatile, and the U.S. and Iran held differing attitudes toward war, with ferrous metals consolidating at high levels; the pullback in the second half of the week was also mainly due to the weakening of the cost-side logic, as market rumors said long-term iron ore contract negotiations had been completed, expectations for tightening iron ore supply declined, and raw materials turned into the main driver of the pullback. In the spot market, speculative trading and end-user purchase sentiment improved in the first half of the week, while rigid demand remained dominant in the second half, and the spot-futures price spread widened somewhat......

Recent volatility in the Indonesian commodities sector has been driven by mixed signals regarding new fiscal policies. Market participants are currently evaluating the implications of two distinct regulatory mechanisms: a broader windfall tax on bulk commodities like coal, nickel, and a targeted export duty. The conflation of these two policies has generated significant market uncertainty, culminating in a sharp spike in global nickel prices this week. To understand the current market anxiety, which culminated in a sharp spike in global nickel prices this week, it is essential to unpack the timeline of these policy discussions, differentiate the fiscal mechanisms at play, and assess the likelihood of their implementation. Background: From Broad Windfall Deliberations to Targeted Export Tariffs The narrative surrounding new commodity taxes in Indonesia did not emerge overnight; rather, it has evolved through distinct phases of policy signaling. The current policy discourse has evolved in phases. Initial discussions, highlighted by statements from Coordinating Minister for Economic Affairs Airlangga Hartarto on Mar 13, 2026, focused on the potential implementation of a windfall tax. This broader fiscal measure was aimed at capturing excess margins from exporters of coal, palm oil, and base metals, such as nickel, gold, and copper during periods of elevated global prices, functioning primarily as a macroeconomic revenue-generation tool. However, the conversation shifted dramatically on March 25, 2026. According to Bloomberg, news broke that Indonesia’s President had officially approved an export tax specifically targeting coal and nickel. This headline acted as an immediate catalyst, sending LME and SHFE nickel prices spiking. The confusion currently gripping the market stems from the conflation of these two distinct policy trajectories: the older, revenue-focused windfall tax concept championed by economic ministers, and the newly approved, strategically focused nickel export tax aimed at forcing further downstream industrialization. Analysis & Understanding: The Precedent of the "Windfall Tax" To accurately gauge the impact of these rumors, it is critical to understand that the concept of a "windfall tax" is not entirely unprecedented in Indonesia's regulatory framework, particularly for bulk commodities. There has actually been a windfall tax structure in place previously, though often masked under the nomenclature of progressive royalties and non-tax state revenues (PNBP). For the coal sector, the government already utilizes a tiered royalty system pegged to the Harga Batubara Acuan (HBA) benchmark. As coal prices escalate into higher brackets, the royalty percentage automatically increases, effectively acting as a windfall capture mechanism. Similarly before, the nickel sector utilizes the Domestic Benchmark Price (HPM) and associated royalty structures to adjust to global price rallies. It is crucial to note that the government has previously experimented with specific windfall profit provisions for downstream products, though the regulatory stance has recently hardened. For instance, under Government Regulation (GR) No. 26/2022, a unique windfall profit incentive was applied to nickel matte: when prices exceeded $21,000 per ton, the royalty rate was actually reduced from the standard 2% to 1%. (Old Version) However, this accommodating policy was explicitly abolished under the recent GR No. 19/2025. The removal of this incentive underscores a definitive shift toward more aggressive state revenue capture. Consequently, the recent "windfall tax" rumors primarily concern further tightening these existing brackets or introducing a supplementary surcharge on operating margins above a specific baseline. (New Version) Conversely, the newly approved nickel export tax serves a different primary function. Therefore, it is completely different than the concept of windfall tax. Rather than merely earning from peak profits, an export duty on semi-processed nickel (like NPI, MHP, FeNi, and Nickel Matte) is a structural tool designed to penalize the export of lower-value products. It is the natural continuation of Indonesia’s downstreaming ( hilirisasi ) agenda, intended to force producers to build stainless steel and EV battery precursor plants domestically in Indonesia, rather than shipping intermediate goods to other countries. While a windfall tax fluctuates with market prices, an export tax acts as a permanent structural cost added to the global supply chain. Conclusion: Imminent Implementation Amidst Ongoing Deliberations Despite definitive headlines regarding executive approval and the targeted April 1, 2026 implementation date, the exact implementation details are currently under review by the relevant ministries. Currently, specific details, including exactly how the proposed 5%, 8%, and 11% tiers might translate from coal to specific nickel material classifications (e.g., NPI, MHP, and high-grade matte), must be urgently finalized ahead of the April deadline. The Ministry of Energy and Mineral Resources (ESDM), the Ministry of Finance, and the Coordinating Ministry for Maritime and Investment Affairs are working to balance state revenue optimization with the need to maintain the global cost-competitiveness of domestic smelters. This deliberative phase should not be interpreted as a policy reversal. According to SMM's understanding and industry checks, the implementation of these fiscal measures is highly probable. While the exact rollout of tariffs may be structured to mitigate immediate operational shocks to the domestic smelting sector, the fundamental policy direction indicates that the era of tariff-free exports for intermediate nickel products might decisively coming to an end.

The European Commission will update Emissions Trading System (ETS) free allocation benchmarks and utilize the Market Stability Reserve to curb carbon price volatility "within days". President von der Leyen announced a medium-term ETS review to establish a "realistic trajectory" for free allowances beyond 2034. The EU is also proposing a $35 billion "ETS Investment Booster" fund to finance decarbonization projects, prioritizing lower-income states. To address soaring energy costs, the Commission plans to allow member states to reduce grid charges for energy-intensive industries and mandate lower taxes on electricity compared to fossil fuels. This follows intense pressure from steelmakers and EU nations demanding an urgent ETS overhaul by July.

Recently, Joint Circular No. 00156 of the Ministry of Finance and the Ministry of Mines of the DRC / Cabinet of the Ministry of Mines / 2026 and Cabinet of the Ministry of Finance / 2026, concerning regulatory measures to standardize control over deviations in the detection of refined cobalt content in exported cobalt hydroxide under the quota system framework of the Authority for the Regulation and Control of Strategic Mineral Substances’ Markets in the DRC, is translated as follows: The English translation of the above text is:

[SMM Aluminum Express News] The Aluminium Association of India (AAI), representing major domestic producers, has urged the government to exempt aluminum products from the recent 50% cut in RoDTEP (Remission of Duties and Taxes on Exported Products) rates. Previously, aluminum exports qualified for ~3% RoDTEP benefits for Domestic Tariff Area (DTA) units and ~2.2% for SEZ units. AAI warned that the cut could strain exports amid rising global trade barriers (e.g., tariffs, CBAM), shrinking opportunities, and competition. It also called for 2026-27 RoDTEP rates to be set based on actual unrebated taxes borne by exporters, ensuring fair compensation for both DTA and SEZ units. This aims to maintain competitiveness for Indian aluminum in international markets.

[SMM Aluminum Express News] Indonesia's Ministry of Energy and Mineral Resources (ESDM) targets tax compliance as a mandatory requirement for submitting the Work Plan and Budget (RKAB) starting in 2027. Previously, Director General of Taxes at the Ministry of Finance Bimo Wijayanto stated that his office and the Directorate General of Minerals and Coal (Ditjen Minerba) ESDM are finalizing discussions on this new regulation. The rule will require a fiscal compliance certificate as an integral part of RKAB submissions for mining companies, ensuring tax obligations are met before annual RKAB approval.