Indonesian metals producers are facing mounting challenges as steep increases in sulphur prices coincide with expectations of lower nickel demand and falling nickel prices. Some companies are now considering delaying new projects.
Sulphur, a key raw material in the production of nickel intermediates like nickel matte and mixed hydroxide precipitate (MHP), has seen its prices surge due to increased demand from Morocco and Indonesia. Morocco's OCP has ramped up sulphur consumption with two new burners, while newly commissioned HPAL production lines in Indonesia have also added significant demand.
Supply concerns stemming from EU sanctions on Kazakh and Russian sulphur exports have further tightened availability. The resulting price rally saw Middle East sulphur prices more than triple to $285.5 per ton FOB as of 1 May, while granular sulphur prices in Indonesia rose to $297 per ton CFR.
Despite soaring sulphur costs, nickel intermediate prices have remained largely stable, squeezing producers' profit margins. The adoption of non-nickel battery technologies and the shift toward plug-in hybrid electric vehicles have also dampened nickel demand projections. The International Nickel Study Group estimates a surplus of 198,000 tons of nickel in 2025, up from 179,000 tons in 2024.
In response to these pressures, planned expansions, including QMB New Energy Materials' phase 3 in Morowali and developments by Guangqing and Blue Sparkling Energy in Weda Bay, may face delays. These projects were expected to add 844,000 tons per year to sulphur demand at full capacity.
