HPM Policy Takes Effect: Will Stainless Steel Enter a Cost-Driven Rally?
On April 15, 2026, Indonesia’s new nickel ore HPM policy was officially launched. It brings fundamental changes to the previous market pricing logic. The market once completely followed LME nickel prices. Indonesia’s official policy has become a new pricing anchor. The cost support logic for stainless steel has been strengthened accordingly. Affected by this, main futures contracts of Shanghai nickel and stainless steel rose sharply. Has a new round of cost-driven stainless steel market trend already begun?
Key Summary of Impacts from Indonesia’s New Nickel Ore Policy
Starting from April 15, 2026, Indonesia’s Ministry of Energy and Mineral Resources (ESDM) began to implement the revised nickel ore benchmark price (HPM) calculation formula.
HPM means mineral benchmark price. It is an official guiding price of nickel ore released by the Indonesian government every month. It serves as the tax basis for nickel ore export tariffs and domestic trade taxation.
Core policy adjustments include two points. First, the correction coefficient for 1.6% grade nickel ore was greatly raised from the original 17% to 30%. Second, cobalt, iron and chromium are included in the pricing formula for the first time. The correction coefficients of cobalt and iron are both set at 30%, while chromium is set at 10%. Specific clauses stipulate that its value will be included in the formula when cobalt content ≥0.05% and iron content ≤35%. For the RKEF ferronickel process used in stainless steel production, the new policy mainly raises the official base price of its core raw material, 1.6% grade nickel ore. Although the RKEF process has very low cobalt recovery value, Indonesia’s new policy adds cobalt pricing. This will affect smelters’ raw material procurement preferences to a certain extent.
In terms of nickel ore quota approval, as of April 6, Indonesian authorities stated that nickel ore mining quotas of 190 million to 200 million tons had been approved. There is still a gap of about 60 million to 70 million tons from its 2026 nickel ore production quota target (260–270 million tons). Slow approval progress also strengthens market expectations of tight nickel ore supply.
The total approved volume still cannot meet smelters’ demand. Most enterprises plan to increase procurement and stockpiling before the new rules take effect. At present, smelters have quite different nickel ore inventory levels. Some large manufacturers only have half a month of inventory left. Most manufacturers maintain inventory levels of 1 to 2 months. Driven by low smelter inventory, official implementation of the new HPM policy and remaining gaps in RKAB quota approval, nickel ore prices may enter a rising channel again in the future.
Ferronickel Prices Rebound Slightly; 304 Stainless Steel Profits Keep Expanding
Entering April, nickel ore and ferronickel prices fell slightly and then gradually stabilized. Ferronickel prices have rebounded after the new policy took effect. On April 15, the CIF price of Indonesia’s 1.6% grade nickel ore stood at 71.22 US dollars per wet ton. Domestic delivered ferronickel price rose by 5 yuan per nickel unit to 1100 yuan per nickel unit from the previous day. However, steel mills hold low acceptable prices. Waste stainless steel also becomes highly cost-effective and creates substitution pressure on ferronickel. Ferronickel prices are still in a game stage at present. We need to focus on steel mill transaction price guidance in the follow-up period.
High Output in April; Low Inventory Pressure for 300 Series Stainless Steel
In terms of output, stainless steel crude steel planned output in April decreased slightly by 0.65% month-on-month to 3.7713 million tons. It generally maintains the high operation trend of the first quarter. The supply side remains strong. By series, planned output of 200 series decreased by 3% month-on-month in April. Planned output of 300 series increased slightly by 1.1% month-on-month, staying at a five-year high for the same period. Planned output of 400 series decreased by 1.5% month-on-month.
In terms of inventory, as of April 9, national social inventory of stainless steel reached 1.14 million tons, a year-on-year increase of 9.53%. Among them, the 400 series achieved the most significant year-on-year growth. The 200 series saw slight year-on-year growth. This verifies the rationality of steel mills’ output reduction plans. Inventory of 300 series reached 640,000 tons, a year-on-year drop of nearly 8%. Compared with the 200/400 series, the inventory level of 300 series is relatively healthy. It also provides room for output growth.
Summary
Indonesia’s new nickel ore policy has been officially implemented. Combined with tight quota approval and low smelter inventory, nickel ore prices may rise again in the future. The cost support logic for stainless steel has been strengthened. In addition, Indonesia’s nickel export windfall profit tax, originally scheduled to take effect on April 1, has been delayed due to internal government consultations. Its future implementation will further raise export costs of Indonesian nickel products.
Cost-side trends are unfolding. Looking back at stainless steel fundamentals, the 300 series faces low inventory pressure at this stage. Its profits keep expanding. The supply-demand contradiction is not obvious. Boosted by futures markets recently, the spot market raised prices actively. But prices rose too fast. Downstream procurement tends to be cautious. Sellers mainly ship goods through flexible discounted offers.
Overall, raw material cost support has been enhanced. It boosts stainless steel prices in the short term. However, the sustainability and upside of price increases still depend on follow-up demand. The current market is in a volatile game pattern. We need to pay close attention to Indonesia’s policy implementation intensity and changes in raw material prices later.