Nickel prices were rangebound on Thursday, with LME three-month nickel settling at $18,810/mt, down just $15 from Wednesday's close. The market remains rangebound as participants assess conflicting signals from the supply side. Indonesia's government has yet to announce H2 2026 ore mining quotas, creating uncertainty for the nickel pig iron (NPI) supply chain.
LME inventories declined 0.8% to 109,500 tonnes, with 68% consisting of Class I nickel (briquettes, cathodes, pellets). The remaining 32% is primarily nickel sulfate and nickel-bearing materials. Inventory levels remain well above the March lows of 85,000 tonnes but are trending lower after peaking at 125,000 tonnes in May.
The Indonesia quota situation is the dominant near-term risk. The government initially signaled a total ore quota of 240-250 million tonnes for 2026 but has delayed finalizing H2 allocations pending review of environmental compliance. Any reduction from this level would tighten the NPI market and support refined nickel prices.
Nickel sulfate premium to LME nickel held at $2,500/mt, reflecting robust battery sector demand. The premium has been stable for three weeks, suggesting balanced near-term supply-demand for Class I nickel.
The Indonesia quota uncertainty creates a binary risk for nickel prices. If H2 quotas are cut, expect a $1,500-2,000/mt rally. If maintained, prices could drift toward $17,000/mt. Buyers should partial-hedge now and add coverage if prices dip to $17,500. The Class I premium to NPI supports a floor near $17,000/mt.