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.

This week, ternary cathode precursor prices increased slightly, while sulphate prices were all flat today. Discounts, for April and Q2 orders, some producers were willing to raise discounts due to large fluctuations in raw material prices. Long-term contracts, some producers recently finalized long-term agreements. As downstream demand was relatively weak, discount increases were expected to be limited, but there was some room for negotiation on processing fees. Spot orders, the Ni-Co-Mn coefficient for spot orders rose this month, and with current downstream procurement sentiment weak, further upside room was expected to be limited. Production, leading producers in China and those with relatively large export orders still maintained high operating intensity. Looking ahead, recent sulphate costs provided strong support, but downstream acceptance remained subject to observation of downstream demand in Q2.

On March 25, the SMM average price of battery-grade nickel sulphate remained stable.

As of Thursday this week, the average SMM battery-grade nickel sulphate price edged down slightly WoW. Demand side, trading sentiment was weak in mid-month, and some producers made inquiries recently, but as downstream orders remained unclear, acceptance of high-priced nickel salt was weak; supply side, due to uncertainty in Indonesia's recent MHP supply, MHP payables moved higher, driving up raw material costs for some producers and correspondingly lifting their quotes. Looking ahead, with the month-end procurement period approaching, attention should be paid to support from the raw material side for nickel sulphate prices. Inventory, this week upstream nickel salt smelter inventory index held at 4.7 days, downstream precursor plant inventory index fell from 7.1 days to 6.8 days, and integrated enterprises' inventory index held at 6.8 days; in terms of buyer-seller strength, this week the upstream nickel salt smelters' Willingness to Sell Sentiment Factor held at 1.8, the downstream precursor plants' procurement sentiment factor fell from 2.7 to 2.6, and integrated enterprises' sentiment factor held at 2.4. (Historical data is available in the database.)

On March 18, the SMM average price of battery-grade nickel sulphate remained unchanged.

On March 17, the SMM average price of battery-grade nickel sulphate remained unchanged.

On March 13, the average price of SMM battery-grade nickel sulphate rose slightly.

This week, ternary cathode precursor prices were broadly stable. Raw materials, nickel sulphate prices edged up today, while cobalt sulphate prices and manganese sulphate prices held steady. Discounts, for March orders, as raw material prices were expected to rise to some extent, some producers recently showed willingness to raise nickel discounts. Long-term contracts, as downstream orders remained unclear, acceptance of higher discounts did not improve significantly and was basically flat from February. Spot orders, discounts for some earlier orders had already been finalised before the Chinese New Year, while discounts for the remaining March orders rose slightly from February; production, precursor production schedules in March recovered overall from February, with some leading producers in China and producers with relatively large export orders maintaining high operating rates. Looking ahead, sulphate prices have recently remained generally firm and may provide further support for precursor prices from the cost side.

As of this Thursday, the average SMM battery-grade nickel sulphate price rose WoW. Demand side, some producers recently began making inquiries, and procurement sentiment improved somewhat, but as downstream orders remained unclear, they still took a wait-and-see attitude toward high-priced nickel salt. Supply side, due to uncertainty in Indonesian MHP supply recently, some producers expected raw material costs to rise and raised their offers accordingly. Looking ahead, Q2 is about to begin. Attention should be paid to support from the raw material side for nickel sulphate prices. Inventory side, this week the inventory index at upstream nickel salt smelters remained at 4.7 days, the inventory index at downstream precursor plants fell from 7.4 days to 7.1 days, and the inventory index at integrated enterprises declined from 7 days to 6.8 days. In terms of buyer-seller balance, this week the Willingness to Sell Sentiment Factor at upstream nickel salt smelters remained at 1.8, the procurement sentiment factor at downstream precursor plants remained at 2.7, transaction sentiment recovered slightly, and the sentiment factor at integrated enterprises remained at 2.4. (Historical data is available in the database.)

On March 11, the SMM average price of battery-grade nickel sulphate rose slightly.