On January 30, 2020, SSINA released the following policy statement regarding Indonesia’s raw materials export restrictions:
The Specialty Steel Industry of North America (SSINA) supports the United States’ request to join the World Trade Organization (“WTO”) consultations regarding Indonesia’s measures relating to raw materials, including nickel (“DS592”). Indonesia’s ban on the exportation of nickel ore, domestic processing requirements, domestic marketing obligation, and export licensing scheme violate its obligations under the WTO and artificially restrict the global nickel trade. They should be condemned as pure domestic protectionism and removed.
SSINA is a voluntary trade association representing the majority of producers of specialty metals in North America. Our members produce a variety of products including bar, rod, wire, plate, sheet, and strip, in stainless steel and other high performance metals. SSINA promotes sound public policies to ensure a healthy and vibrant industry and works to expand the recognition and use of specialty metals in North America.
Stainless steel is a unique, important, and high-value metal. It is critical to the U.S. manufacturing base and essential to our innovation economy and our national defense.
Nickel is an essential alloying element in most stainless steels. Nickel adds strength, ductility, and toughness to stainless steel. It also makes the material non-magnetic and significantly improves its corrosion resistance to acids. The price of nickel has a significant effect on the price of stainless steel, as the cost of nickel represents approximately half the price of stainless steel products. The stainless steel industry uses 70 percent of the world’s nickel.
Indonesia, the world’s largest nickel producer, announced in August 2019 that the country would reimpose a ban on the export of nickel ore effective January 1, 2020. Indonesia originally imposed a complete export ban in 2014, but eased certain restrictions in 2017 to allow for limited exports. Indonesia had initially planned to reinstate the total ban in January 2022.
On November 27, 2019, the European Union (“EU”) requested consultations with Indonesia through the WTO Dispute Settlement Body. The EU alleges that Indonesia’s nickel ore export ban and various other restrictions violate Indonesia’s WTO obligations.
SSINA agrees with the EU that Indonesia’s measures violate its WTO obligations, and we support the United States’ request to join the DS592 consultations. We urge the United States to take an aggressive approach to resolving this issue, with the hope that Indonesia will end its discriminatory and market-disrupting practices. This is consistent with the approach taken by the United States in other cases where foreign countries have placed similar export restrictions on raw materials vital to the steel industry and our national defense.
Indonesia’s restrictions unnecessarily burden the global market for nickel. By refusing to export nickel, Indonesia reduces the price of nickel for its domestic producers while simultaneously increasing global prices. This artificial market distortion significantly lowers Indonesian stainless steel producers’ costs and allows them to gain market share unfairly. Such restrictions threaten free and fair trade.
Global commodity markets must function free from export restrictions. Indonesia’s restrictions create an artificial nickel shortage to the detriment of all other producers around the world.
SSINA supports the United States in its efforts to end Indonesia’s distortive practices and urges the United States to apply the pressure necessary to restore the global nickel market to its fair and natural equilibrium.