The LME nickel market experienced its most acute supply scare of 2026 so far in late May as Weda Bay — the sprawling industrial park in Central Sulawesi that anchors Indonesia's high-grade nickel pig iron output — began rotational maintenance across multiple furnaces. Spot prices surged 3.2% in a single Asian session to touch $19,165/t, the highest level in two years, before settling back to $18,806/t as traders digested the scope and duration of the curtailment. (FACT: LME, Discovery Alert, May 2026)
The maintenance event does not exist in isolation. Indonesia, which now accounts for roughly 60% of global nickel output, has concurrently tightened its RKAB mining plan approval process. Delays have already forced PT Vale Indonesia to halt operations at its Pomalaa and Bahodopi sites. The government has also stopped issuing new NPI and matte smelter permits as part of a broader strategy to manage ore depletion and stabilise prices. On top of this, surging sulfur costs from the continued closure of the Strait of Hormuz are squeezing HPAL producers, who supply roughly 14% of global nickel. (FACT: Reuters, Morgan Stanley, May 2026)
Goldman Sachs has identified tightening Indonesian ore supply as the primary basis for upward revisions to its nickel price forecasts, noting that Jakarta's structural leverage over global output creates asymmetric repricing risk when quota discipline tightens. However, the rally has so far been capped by the overhang of LME inventories at 287,550 t — up 44.2% year-on-year — which provides a buffer against runaway price moves. The key support level remains $16,000/t, while $20,000/t acts as firm resistance. (FACT: Goldman Sachs, ING, May 2026)
The Weda Bay maintenance is a tactical tightening event layered on top of a structural supply squeeze. For stainless steel mills and nickel intermediate buyers, the window of comfortable pricing may be narrowing. With RKAB delays persisting and sulfur costs rising, expect Indonesian supply to remain choppy through Q3. Buyers should consider locking in Q3 volumes now rather than relying on spot availability, and closely watch the $20,000/t resistance level — a clean break above it would signal that the surplus narrative is losing its grip. Maintain conversations with multiple NPI suppliers; concentration risk in Indonesia has never been higher.