Indonesia’s nickel boom and the stainless scrap question

Indonesia’s nickel boom has changed the world’s stainless steel raw materials market, and the scrap question inside it is not usually asked. The country used ore export restrictions to build a processing industry, and the industry it built consumes ore rather than scrap, which means the world’s largest stainless production base runs on a primary input while the scrap trade that usually feeds stainless mills runs elsewhere. That is a market structure rather than an environmental story, and its interest is what happens when the structure matures.

The boom’s mechanism is documented policy rather than market luck. Indonesia’s ore export ban, imposed and re-imposed across the last decade, was the instrument that converted the country’s laterite resource into domestic processing investment, and the processing capacity that resulted produces nickel pig iron and stainless steel at a scale that moved international prices and supply routes. The trade’s description of the resulting structure is that the country’s production runs on ore-derived intermediates, which is a deliberate industrial choice rather than an accident of feed availability, and the choice’s cost is the absence of the scrap circuit that other stainless centres run on. The ore route is now the world’s dominant one, and the scrap question is what that route leaves undone.

The e-waste side of the country’s material position is separate, and it is worth knowing because it is the potential scrap circuit. The Monitor records Indonesia generating about 1.9 billion kilograms of e-waste in 2022, the largest total in South-east Asia at 6.9 kilograms per person, and its assessment is that e-waste management is in an early stage under the Hazardous and Toxic Waste Management Regulation of 2014 with no specific e-waste regulation, limited facilities and much of the material ending up in landfill, while South-east Asia as a whole recorded no documented formal collection. Indonesia also has the National Action Plan on E-waste Management, developed in 2019 and launched in February 2020. The nickel boom and the e-waste system are two discussions in the same country, and the stainless sector’s future feed is the conversation where they meet.

The stainless scrap economics are the reason to expect them to meet, and they are simple enough. Stainless steel’s nickel content can come from primary nickel or from stainless scrap, and the choice is a price decision the mills make continuously, with the scrap circuit’s availability deciding the range of the decision. A production base built on ore, in a country generating an undocumented e-waste stream that includes nickel-bearing stainless fractions, is a base that will discover its own scrap as the in-use stock turns over, and the Monitor’s estimates for the region, 18 billion kilograms handled informally with around 12 billion US dollars of processed metal, describe the workforce that will gather it. The question is not whether the scrap appears but whether the Indonesian system measures it before the international market buys it unrecorded.

Why now is the nickel market’s own cycle against the stock cycle. The nickel price’s volatility, which reached the point of a trading suspension on the London Metal Exchange in 2022, is the market structure the ore-route capacity produces, and the price’s behaviour creates the commercial argument for a scrap circuit a second time. The world’s e-waste generation has risen five times faster than documented recycling since 2010 and the documented rate is projected at 20 per cent by 2030, which means the measurable secondary materials the stainless industry will want are getting scarcer relative to the demand they face, and Indonesia’s position is the extreme version of that problem because its own stream is entirely undocumented.

What should happen is the extension of the action plan into a collection circuit for the nickel-bearing fractions, because the stainless industry and the e-waste system would both need it and the country has both instruments. The licensing of collectors under the action plan’s successor, with payment per delivered kilogram and weighbridge records, would produce a domestic scrap circuit for a stainless industry that currently has none, and the ore-route capacity keeps the country competitive while the circuit is built. The country’s choice is whether its nickel industry’s second feedstock is its own scrap or its neighbours’, and the answer decides whether the 12 billion dollars of regional informal processing stays inside the Indonesian economy or leaves it unrecorded.

For traders, Indonesia’s nickel question is the stainless feed question in its largest form, and the country’s eventual scrap circuit will be one of the largest nickel-bearing secondary materials markets in the world if it is built. The Monitor’s figures summarise the position: 91 billion US dollars in the world’s 2022 e-waste metals with 28 billion captured, and a South-east Asian share that is currently all in the uncaptured part. The Global E-waste Monitor 2024 holds the Indonesian and regional figures, the Basel Convention governs the international movements the scrap circuit would eventually trade under, and platforms such as scrap.trade carry the documented trade a licensed collection layer would produce.

Indonesia built a nickel industry on ore because the policy made that the route, and the scrap question is the bill arriving for the same policy’s success. The material is in the country, the collectors are in the country, and the measurement is the piece nobody has yet installed, which is also the piece the international market has been waiting for. When it is installed, the nickel boom’s second chapter will be written in the country’s own scrap, and the first chapter’s ore-route logic will have produced the processing base that makes the replacement possible.