Indonesia's Ministry of Finance issued Decree No. 32/MK/BC/2026 on May 31, imposing restrictions on the export of strategic natural resource commodities under the ferroalloy category (HS Code 7202). The decree took effect on June 1, 2026. Under the new rules, products classified under HS Code Ex.7202.60.00 -- including ferronickel (FeNi) with nickel content ≥ 8%, sponge ferronickel and granular ferronickel with nickel content ≥ 4%, and low-grade ferronickel products with 2% ≤ Ni < 4% and iron content ≥ 75% -- were required to obtain an inspection report (Laporan Surveyor) and relevant export permits. From January 1, 2027, these ferroalloy products could only be exported by state-owned export enterprises (BUMN Ekspor) or with a certificate of eligibility (Surat Keterangan) issued by the Ministry of Trade. For exports to specific destinations, such certificates could replace the inspection report regardless of whether the exporter was a state-owned or non-state-owned enterprise.
The new regulation also repealed the previous restrictions on ferroalloy commodities under the Minister of Finance Decree No. 24/MK/BC/2026. As Mysteel had previously predicted, Indonesia had finally taken the first step toward implementing export centralization at the policy level by revising the definition of NPI HS codes and incorporating implementation rules and timelines into a ministerial decree.
I. How does Indonesia's "innovative" definition of ferronickel differ from customs definitions in other countries?
Through the issuance of Minister of Finance Decree (KMK) No. 32/MK/BC/2026, Indonesia expanded the definition under HS Code 72026000 to include ferronickel (FeNi) with a nickel content greater than 2%, and innovatively introduced a definition based on the physical form of ferronickel. The core significance of this revision lies in its divergence from the definition of ferronickel (FeNi) commonly used in customs commodity classifications worldwide. Although Indonesian NPI production declined significantly year-on-year in 2026, Indonesia still accounts for approximately 70% of global nickel supply. By modifying the definition of commodities in trade regulations, Indonesia is shaping its own voice in the nickel market.
However, it is worth noting that Regulation No. 26/PMK.010/2022 (PMK), which governs the commodity classification system for imports and the determination of import duties, has not been repealed. The definition of HS72026000 under that regulation remains consistent with the definitions used by other countries globally. This situation mirrors the approach taken by Indonesia's Ministry of Energy and Mineral Resources in revising regulations related to the RKAB review policy, suggesting that policy uncertainty is likely to persist over the longer term.
Historically, the nickel content of Indonesian-produced ferronickel (in the market sense, rather than the customs sense) has ranged from 4% to 22%. Under the definition set forth in Minister of Finance Decree No. 32/MK/BC/2026, all Indonesian-produced ferronickel (in the market sense) falls under HS Code 72026000 and thus belongs to the ferroalloy category (HS 7202), placing it within the scope of the first batch of HS codes covered by Indonesia's export centralization policy. Under the definition in Minister of Finance Regulation No. 26/PMK.010/2022 and the commodity classification systems used by other countries, however, over 90% of Indonesian-produced ferronickel falls under HS Code 72026000, while a small portion falls under HS Code 72015000 (pig iron). HS Code 72015000 is not included in the first batch of HS codes designated under Indonesia's export centralization policy.
II. The new definition signals a new landscape for ferronickel
The departure from the commodity classification definitions used in other countries for imports implies a change in the environment for Indonesian-produced ferronickel (in the market sense) in global trade, with the most immediate impact being as follows: ferronickel products from Indonesia that were not previously classified under HS72026000 would now be exported under that code from Indonesia, but imported under a different HS code in the destination country. Differences in commodity classification rules and their practical application between the two countries' customs authorities would result in additional import tariff costs for such Indonesian-produced ferronickel (in the market sense, rather than the customs sense) in the destination country. Drawing from past experience in the ferronickel market, when the HS codes of the country of origin and the importing country did not match, imports into China would incur an additional 2% MFN import tariff.
Currently, Indonesian-produced ferronickel (in the market sense) traded in international bulk commodity markets does not experience such mismatches between the HS code of the country of origin and that of the destination country. However, with the consumption of domestic nickel ore in Indonesia continuing to rise, a decline in the nickel content of finished products had become a foreseeable trend. This new regulation by Indonesia's Ministry of Finance provided the policy framework for that trend.
III. Indonesian ministries coordinate to support the policy, with scope and boundaries gradually taking shape
It is known that PT DSI, the state-owned export enterprise (BUMN Ekspor) designated to implement export centralization, is under the purview of Indonesia's Ministry of Trade. It is also a subsidiary of Danantara, Indonesia's sovereign wealth fund, which has participated in equity transactions involving nickel smelting projects on multiple occasions. Indonesian commodity exports are closely linked to Indonesian Customs, which falls under the jurisdiction of the Ministry of Finance. Meanwhile, the organizational members of Danantara and the Ministry of State-Owned Enterprises (BUMN) are jointly composed of personnel from the Ministry of Trade and the Ministry of Finance.
Before 2026, the mining management policy framework led by Indonesia's Ministry of Energy and Mineral Resources, which combined "tax" (mineral royalties) with "price" (the HPM reference price for metal mineral commodities), was already relatively well established. Looking back at the successful process from policy framework development by the Ministry of Energy and Mineral Resources to smooth and stable implementation through the Ministry of Finance and the Ministry of Trade via customs enforcement, the approach taken in 2026 follows a similar pattern. Through customs as a policy gateway, Indonesia is building a new policy framework with the aim of participating in international ferronickel trade on more favorable terms. Indonesia has now taken the first step, but international bulk commodity trading is not as easily controlled as issuing new government regulations. With numerous participants and multiple overlapping layers of trade flows, shipping flows, contractual flows, and capital flows, unified coordination is necessary to ensure transaction security. DSI, as a company established in 2026, has an unknown team composition and no prior experience in international bulk trading. Cooperation with upstream smelters and downstream overseas buyers has yet to be developed.
Currently, the Indonesian government is collecting paper documents such as smelter production reports and related trade contracts to understand and learn the actual operational procedures of international ferronickel trade. With six months remaining until the implementation of the export centralization policy, continued attention to relevant policy documents issued by the Indonesian government is warranted.
Written by Cora Ji, jiruyan@mysteel.com
