February 9, 2026 12:27 AM GMT Commodity Matters | Europe Thermal Coal: Upside Risk from Indonesia Output Cuts We flag upside risk to thermal coal prices from Indonesian output cuts. Recent RKAB quota indications suggest material cuts for smaller miners, and we forecast an 17% drop in Indonesian exports YoY. Weak China demand partially offsets price impact, but we still see a tighter market YoY by 18 Mt. Key Takeaways The Indonesian government is aiming for extensive output cuts in 2026: It aims to support c ...

Group 1: Report Industry Investment Rating - Not provided in the content Group 2: Core Viewpoints of the Report - The nickel price is currently in a consolidation phase. Last week, Indonesia's review of the compliance of port logistics in the nickel industrial park increased the risk of supply disruptions, and the rainy season in the main production areas poses a challenge to the stability of raw material supply. In December, the net import volume of nickel products increased significantly, while weak downstream demand led to a further accumulation of inventory contradictions. However, as nickel ore supply tightens and the supply - demand pattern is expected to improve, the nickel price still has upward momentum [3][4] Group 3: Summary by Relevant Catalogs Nickel Market - **Nickel Price and Market Sentiment**: The nickel price is in a volatile state. The Shanghai Nickel 2602 contract opened at 141,500 yuan/ton and closed at 148,010 yuan/ton last week, with a weekly increase of 4.71%. The overall market sentiment shows that although there are short - term supply disruptions, the long - term supply - demand situation may drive the price up [3][4][9] - **Nickel Ore**: As of January 26, the CIF prices of Philippine laterite nickel ore with grades of 0.9%, 1.5%, and 1.8% were 30, 59, and 78.5 dollars/wet ton respectively, with week - on - week increases of 1, 4, and 0 dollars/wet ton. The domestic trade prices of Indonesian Ni1.2% and Ni1.6% nickel ore also increased. The supply is affected by the rainy season, with mining and shipping in the main production areas severely disrupted. The port inventory of nickel ore decreased to 7.36 million wet tons as of January 23, a week - on - week decrease of 5.03% [33][36] - **Refined Nickel**: In December 2025, China's electrolytic nickel monthly output was 31,400 tons, a month - on - month increase of 21.7%. The inventory continued to accumulate, with the pure nickel social inventory (including the SHFE) increasing to 66,300 tons last week, a week - on - week increase of 4.38%. The cost of electrolytic nickel production also increased slightly [45][49][56] - **Nickel Intermediate Products**: As of January 26, the FOB prices of MHP and high - grade nickel matte increased. In December 2025, Indonesia's MHP and high - grade nickel matte production increased, while the MHP import volume decreased and the high - grade nickel matte import volume increased [41] - **Nickel Sulfate**: In December 2025, China's nickel sulfate monthly output decreased to 35,000 nickel tons, a month - on - month decrease of 4.47%. The market is in a state of supply - demand game, with some downstream manufacturers adopting a wait - and - see attitude. The cost of nickel salt production provides strong support, and the price is in a volatile and consolidating state [59][65] - **Ferronickel**: In December 2025, the national ferronickel production (metal content) decreased to 21,200 tons, a month - on - month decrease of 22.07%. The supply side remains at a high level, and the price is approaching the upper limit that steel mills can bear, with a key contradiction between cost and profit [70][72] Stainless Steel Market - **Stainless Steel Price and Market Performance**: The stainless steel futures market was strong last week. The main contract opened at 14,290 yuan/ton and closed at 14,725 yuan/ton, with a weekly increase of 3.15%. The spot price of the 304 variety also increased [76] - **Stainless Steel Production**: In December 2025, China's stainless steel crude steel production decreased to 3.2605 million tons, a month - on - month decrease of 6.66%. It is expected that the production in January 2026 will increase to 3.4065 million tons, a month - on - month increase of 4.48% [78] - **Stainless Steel Inventory**: As of January 23, the stainless steel social inventory decreased to 921,600 tons, a week - on - week decrease of 0.61%. The inventory is still on a downward trend, but the speed has slowed down [81] - **Stainless Steel Cost**: The cost of 304 cold - rolled stainless steel increased to 14,009 yuan/ton as of January 27, a week - on - week increase of 1.53%, mainly due to the increase in raw material prices [85] Industry News - PT Gag Nikel in Indonesia was fined for environmental audit defects, and the regulatory mechanism is becoming stricter [7] - The Indonesian Commercial Competition Supervisory Commission pointed out monopoly behavior in the port storage and logistics of the Morowali Industrial Park in Central Sulawesi and required the opening of port services and management [7] - Jilin Jien Nickel Industry Co., Ltd.'s 60,000 - ton nickel sulfate project was officially put into operation on December 31, 2025 [7] - The nickel mine of Vale Indonesia suspended mining activities due to the unapproved RKAB quota in 2026, but the smelting project is still in production [7] - Shengtun Mining Group Co., Ltd. terminated the investment in the 40,000 - nickel - metal - ton high - grade nickel matte project in Indonesia [7]

Core Points - Pacific Nickel Mines (PNM) subsidiary Pacific Nickel International (PNI) has agreed to sell 100% of its shares in the Kolosori nickel project to Green Rock under a share sale and purchase agreement (SPA) [1] - The Kolosori nickel project is located on Isabel Island and is a direct shipping ore nickel laterite project [1] - PNM holds an 80% stake in Pacific Nickel Mines Kolosori (PNMK), which is the owner and operator of the Kolosori nickel project [1] Financial and Legal Aspects - GRP & Associates has agreed to guarantee the buyer's obligations under the SPA [2] - A significant aspect of the transaction is the Glencore deed of release, which releases PNM from all liabilities under the Glencore secured facility agreement, currently guaranteeing $22 million (A$33.85 million) plus approximately $8.6 million in accrued interest [2][3] - The deed of release will become effective upon completion of the SPA and is a condition precedent to closing the transaction [3] Operational Context - PNM previously announced the cessation of operations at the Kolosori project due to operational challenges and a weak nickel price outlook in the short to medium term [5] - The PNM board concluded that entering into the SPA for the sale of the Kolosori nickel project is in the best interests of the company [5] Royalty Agreement - PNI has entered into a royalty agreement with Green Rock, entitling Pacific Nickel to a 1% royalty on nickel ore shipped from the Kolosori nickel project, contingent on monthly shipments exceeding 170,000 tonnes and the benchmark price on the Shanghai Metals Market averaging above $72 per tonne [4]

Core Insights - The company is focusing on operational efficiency following disappointing results in H1 2025, with a commitment to improve performance in the second half of the year [2][4][19] Financial Performance - Adjusted EBITDA (excluding SLN) for H1 2025 was €191 million, down 45% compared to H1 2024, primarily due to reduced contributions from PT WBN and unfavorable product mix [4][19] - Net Income, Group share (excluding SLN) was negative at -€101 million, a decline of €132 million year-on-year [4][19] - Adjusted Free Cash Flow was -€266 million, with liquidity remaining high at €1.7 billion [4][24] Operational Highlights - Safety performance remained strong with a Group TRIFR of 0.6, significantly better than the CSR roadmap target of <1.0 [5] - Manganese ore transported volumes are revised to between 6.5 and 7.0 million tonnes for 2025, with FOB cash costs adjusted to between $2.1 and $2.3/dmtu [4][47] - Nickel ore sales are projected between 36 and 39 million wet metric tonnes for 2025, reflecting revised licensing [4][64] Market Trends - Global carbon steel production declined by nearly 2% in H1 2025, with China experiencing a 3% drop due to reduced domestic demand [33][34] - The price index for manganese ore averaged $4.6/dmtu in H1 2025, down 14% year-on-year, influenced by increased supply from South Africa and Australia [38][39] - Global demand for lithium increased by 29% in H1 2025, driven by electric vehicle sales, while lithium supply also rose, leading to a surplus in the market [81][82] Strategic Initiatives - The company launched an in-depth operational review in June 2025 to enhance performance [4] - A controlled capex plan for 2025 is reiterated at between €400 million and €450 million, focusing on sustaining and strengthening rail transportation capacity [4][97] - The company is actively pursuing health prevention efforts as part of its "Act for Positive Mining" roadmap [8]