A single exemption has calmed fears across the global stainless steel supply chain for now. But Indonesia’s push to tighten control over its resources is far from over. What does this mean for China’s imports and exports, and for the stainless steel pipe market?
Indonesia’s NPI Exemption
On 22 May 2026, Indonesia’s Coordinating Minister for Economic Affairs, Airlangga Hartarto, made an announcement. He confirmed that low-grade Nickel Pig Iron (NPI) would be excluded from the commodity export centralisation policy taking effect on 1 June 2026. This means NPI producers do not need to go through the state-owned platform PT Danantara to export their product. However, high-grade ferronickel was placed under the new controls, as it falls under the iron alloys category. Both products share the same HS code (7202), but the policy treats them differently.
This distinction may sound like a small technical detail. In practice, it matters a great deal to the global stainless steel industry. NPI is the most important nickel raw material used to make 300-series stainless steel. It also makes up the majority of Indonesia’s total nickel export value, which reached USD 16.4 billion in 2025.
The exemption removed a major worry from the market. Before this announcement, a series of tightening resource policies from the Indonesian government had pushed stainless steel futures prices up by around 30% between December 2025 and early May 2026. Market sentiment was extremely tense. Once the exemption was confirmed, the price rally driven by policy fears came to an end.
Background: What is NPI?
Nickel Pig Iron is a type of cast iron made by smelting low-grade nickel ore. It typically contains between 4% and 15% nickel. It is a lower-cost alternative to refined nickel for producing 300-series stainless steel. Indonesia is the world’s largest NPI producer. Its NPI exports account for over 70% of global NPI trade. China is the biggest buyer, with around 95% of its nickel imports coming from Indonesia. Stainless steel production accounts for more than 60% of China’s total nickel consumption.
Indonesia’s Policy Moves in 2026
To understand the exemption, you need to look at the bigger picture of what Indonesia has been doing in the first half of 2026. This is not an isolated event. It is one step in a broader plan to take greater control of the country’s natural resources.
Early 2026
Indonesia cut its nickel ore mining quota (RKAB) for 2026 from 379 million tonnes to between 250 and 260 million tonnes. That is a reduction of roughly 32% to 42%. The government also shortened the approval cycle from once every three years to once a year. These changes tightened the expected supply of nickel ore on the global market.
February 2026
Indonesian regulators launched a strict crackdown on companies that had broken mining rules. PT Weda Bay Nickel was fined 4.3 trillion Indonesian rupiah. Over 100 hectares of its mining land was taken back by the state. In response to growing supply concerns, Goldman Sachs raised its 2026 nickel price forecast by 16%, to an average of USD 17,200 per tonne.
15 April 2026 (Key Date)
Indonesia introduced a new pricing formula for its nickel ore benchmark price (HPM). The correction factor for nickel ore was raised from 17% to 30%. For the first time, cobalt, iron, and chromium were also included in the pricing calculation. For producers using pyrometallurgical smelting, costs went up by around 2,610 yuan per tonne of nickel. For 1.4%-grade nickel ore as an example, the new HPM was 137% higher than before the reform. Shanghai nickel and stainless steel futures jumped sharply. LME nickel prices broke through USD 18,000 per tonne twice within the same month.
11 May 2026
Indonesia announced it would pause plans to raise mining royalties for nickel, copper, and other minerals. This came less than a month after the new rules were introduced. The market read this as a forced retreat. Chinese companies such as Huayou Cobalt had already announced production cuts in response to the earlier policies. Chinese firms have invested over USD 14 billion in Indonesia’s nickel industry and control around 70% of its downstream nickel processing capacity. Indonesia cannot afford to push them away.
22 May 2026 (Key Date)
Indonesia officially confirmed that NPI would be exempt from the export centralisation policy. NPI’s free export channel was preserved. High-grade ferronickel remained under controls. Market fears eased quickly.
How the NPI Exemption Has Affected the Global Stainless Steel Market
The exemption broke the chain of fear that had been building in the market. The chain looked like this: Indonesian controls, then NPI supply disruption, then a shortage of raw materials for 300-series steel, and finally a sharp rise in stainless steel prices. With NPI exports now free to continue, and with Philippine nickel ore supply increasing after the rainy season ended, the supply situation has shifted from tight to relatively comfortable. This has put downward pressure on ferronickel prices and weakened the cost support for 300-series stainless steel.
That said, costs have not simply gone back to where they were. Indonesia’s new HPM pricing formula has permanently raised the overall cost of nickel ore. The cost floor for 300-series stainless steel now sits higher than it did in 2025. At the same time, high-grade ferronickel is still under export controls. The quality of ferronickel output has been uneven because ore grades have been falling for some time. The price premium for high-grade ferronickel has not gone away, and steelmakers that rely on it continue to face pressure.
On the trade side, global barriers have not eased. If anything, they have tightened. The European Union passed new TRQ steel safeguard measures in April, cutting the total import quota by around 47%. These measures take effect on 1 July. India has tightened its BIS certification requirements. China has also strengthened its own export oversight. The overall picture is one where raw material supply pressures have eased in the short term, but trade conditions are getting harder. Stainless steel markets are likely to stay in a choppy, range-bound pattern for some time.
In short, the NPI exemption has taken away some of the immediate raw material supply worries. But Indonesia’s overall direction of tightening control over its nickel resources has not changed. For the stainless steel pipe export industry, both raw material cost swings and shifts in global trade policy will continue to be important factors to watch.