What the park told operators
People familiar with the situation said Indonesia Morowali Industrial Park on Sulawesi told tenant companies over the weekend to trim production of nickel pig iron because drought conditions have constrained water used for cooling and protecting plant equipment. The dry spell is linked to a strengthening El Niño. IMIP is majority owned by China's Tsingshan Holding Group Co. and hosts many tenant firms, and both IMIP and Tsingshan did not respond to requests for comment.
How big are the cuts
Some of the people said the reductions could total around 100,000 tons of nickel pig iron. For scale, Wood Mackenzie estimates IMIP's installed capacity at about 4.2 million tons a year, or roughly 350,000 tons a month. Earlier this month, the park warned that if the water situation failed to improve, output could be lowered 30% to 40%.
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Why it matters for prices and your wallet
Indonesia produces more than half of the world's nickel, much of it processed at industrial parks like Morowali, and the metal is used in both stainless steel and EV batteries. A supply squeeze from IMIP could help steady prices after an approximately 18% drop on the London Metal Exchange since early May; following the news on Tuesday, nickel on the LME briefly gained as much as 1.1%. The weather hit is part of a wider El Niño fallout for Indonesia, which is also battling forest fires and haze that has drifted across parts of Southeast Asia.
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