On April 20-21, 2026, the Shanghai Futures Exchange (SHFE) successively approved two Indonesian refined nickel deliverable brands, the DX-zwdx brand of PT CNGR Ding Xing New Energy and the PTENICO brand of PT Eternal Nickel Industry, each with a registered production capacity of 50,000 tonnes per year. This marks the official opening of China's futures delivery channel for Indonesia's nickel products, and the market subsequently develops expectations of a large influx of imported nickel that would put downward pressure on SHFE nickel prices.
Looking back at the registration process for the two brands, it encountered considerable difficulties. The Eternal project reached one year of production in September 2024, meeting the SHFE registration requirement of "continuous and stable production for at least one year." However, at that time, widespread social unrest in Jakarta prevented the SHFE from conducting on-site inspections in Indonesia as scheduled, forcing the registration process to be postponed. It was not until the end of March 2026 that the factory inspection was completed, followed by official approval in late April. Therefore, the path of these Indonesian nickel brands to SHFE registration was not the rapid process the market anticipated, but rather experienced a delay of nearly six months.
From a theoretical perspective, the import profit chance is currently open, while exports are loss-making, creating favorable arbitrage conditions for Indonesian nickel to be imported by traders and delivered into SHFE warehouses. Under normal market logic, once an overseas brand obtains SHFE registration, traders would actively organize deliveries, thereby increasing China's visible refined nickel inventories and putting downward pressure on front-month SHFE nickel contracts. In reality, however, the delivery chain faces multiple obstacles, making this theoretical transmission difficult to achieve smoothly in the short term.
I. Delivery warehouse capacity constraints put pressure on front-month contract prices
At present, nickel storage capacity at major delivery warehouses in Shanghai, Jiangsu, and Zhejiang has become largely saturated. According to SHFE warrant data as of April 20, the Shanghai Zhongchu Dachang warehouse holds 19,002 tonnes of warrants, while Shanggang Yuncang holds 8,873 tonnes, both at historically high levels. Delivery warehouses in Jiangsu and Zhejiang also report having no spare capacity. This means that even if traders ship Indonesia's nickel into China, they are unable to complete standard warrant registration and delivery against front-month contracts.
Notably, although the Guochu Tianwei warehouse has some capacity available, it has a "no reweighing" issue -- that is, the warehouse directly uses the tag weight to enter into the system upon arrival, without reweighing the material. As actual weight can differ from the tag weight, market participants are generally reluctant to place cargo in this warehouse to avoid potential weighing disputes. The three remaining deliverable warehouses in Shanghai are also unattractive due to their remote locations, high storage fees, and drivers' reluctance to deliver there. As a result, structural bottlenecks in delivery warehouse capacity have become the primary obstacle constraining downward pressure on front-month contract prices.
II. Labeling and quality inspection become hidden barriers for overseas brand delivery
Even if the capacity issue were alleviated, Indonesia's nickel spot material currently circulating in the market generally has labeling that does not comply with SHFE specifications. The SHFE has clear requirements regarding the format and content of labels for deliverable products; cargo that does not meet the standards cannot be used to generate standard warrants. Based on current observations, spot material produced earlier has labels that do not conform to SHFE rules and will most likely not be allowed to re-enter warehouses after rectification. Whether newly produced labels will follow SHFE standards remains to be further observed. Under normal understanding, the registration standards of the SHFE should be proactively provided by the producers themselves; labeling discrepancies may indicate that the producers are not yet willing to let existing old stocks flow into SHFE warrants. Therefore, the spot nickel plate of DX-zwdx and PTENICO currently circulating in the market, due to non-compliant labeling, cannot be delivered against SHFE contracts for the time being.
Furthermore, overseas brands entering SHFE warehouses for delivery are also required to undergo quality inspection. The inspection fee is charged at Yuan 35/tonne, with a minimum charge of Yuan 4,500 per batch -- even if only one piece is tested in a batch, the fee is still Yuan 4,500. This imposes a significant cost constraint on small-to-medium batch deliveries, particularly for bulk cargo traders, as the inspection fee can reduce a portion of their profits.
III. Trader roles and cargo rights allocation
Based on project equity structures and cargo rights allocation, the Eternal project is held by Tsingshan Holding Group (60%) and Huayou Cobalt (40%), while the Dingxing project is held by Tsingshan Holding Group (50%) and CNGR (50%). Cargo rights are allocated in proportion to equity. Output from the two projects is primarily directed to three overseas trading houses: Enexis, Glencore, and Trafigura.
Therefore, the main players for future delivery are these three major traders, along with smaller resellers who purchase from them. If end-user sales remain sluggish, this supply could shift toward futures delivery. However, as noted earlier, issues such as labeling rectification, saturated warehouse capacity, and quality inspection fees mean that the three major traders have not yet formally launched large-scale deliveries. The market needs to closely monitor the progress of labeling rectification and the actual delivery pace of the three major traders.
IV. Divergence between Chinese and overseas inventories intensifies
Several factors currently warrant market attention. First, the import profit chance is not guaranteed to remain open. The SHFE-LME price ratio is influenced by multiple variables including exchange rates and LME price fluctuations, and can close periodically, creating uncertainty over the sustainability of the arbitrage chance. Second, the current inventory pattern shows a clear divergence between Chinese domestic and overseas stockpiles. Domestic social inventories in China continue to accumulate, while LME nickel inventories are in a mild drawdown. This divergence implies that if overseas inventories fall to low levels while China's import chance closes, the domestic-overseas price spread could reverse, and the earlier logic based on import arbitrage would need to be reassessed.
Written by Cora Ji, jiruyan@mysteel.com
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