The nickel market's surplus narrative is collapsing under the weight of Indonesian policy. When Jakarta slashed the 2026 RKAB ore quota to approximately 250-260 million tonnes — down sharply from 379 million tonnes in 2025 — the global supply-demand calculus shifted overnight. Macquarie, one of the most closely watched forecasters in the nickel complex, responded by slashing its 2026 global surplus estimate from 250kt to just 89kt, a reduction of nearly two-thirds. (FACT: Macquarie, May 2026)
The numbers tell a compelling story of tightening fundamentals. Macquarie simultaneously raised its 2026 average nickel price forecast to $17,750/t, a level that reflects the reduced surplus but still sits below current spot trading. LME three-month nickel settled at $18,790/t on May 26, near the two-year high of $19,400+ touched in early May, and up approximately 22% year-on-year. The market is pricing in the tightening, but the question is whether it has fully absorbed the structural shift. (FACT: LME, TradingEconomics, May 2026)
Yet not every forecaster is as bullish. ING maintains a 2026 surplus view of 261kt with an average price forecast of just $15,250/t, arguing that Indonesia's quota policy is still being implemented and that enforcement may prove more flexible than written. The divergence between the Macquarie and ING forecasts is unusually wide — 172kt in surplus terms and $2,500/t in price terms — reflecting deep uncertainty about how effectively Indonesia will enforce the reduced quotas. What is not in dispute is that the policy direction has shifted decisively toward conservation, and that alone has removed the bearish anchor holding nickel below $16,000. (FACT: ING Think, Macquarie, May 2026)
The market is now described as "policy-driven and range-bound" — a characterization that undersells the significance of the Macquarie revision. A surplus shrinking from 250kt to 89kt is a structural recalibration, not a marginal adjustment. If ore supply continues to underperform demand, Indonesia may need to supplement its quotas mid-year, or the market could swing into deficit sooner than any forecaster currently projects.
The gap between the most bullish and most bearish surplus forecasts — 89kt versus 261kt — represents a massive range of potential price outcomes. For buyers, the prudent position is to assume that Indonesian enforcement will be effective, meaning the surplus is shrinking and prices have found a higher floor. Forward coverage at current levels around $18,500-19,000/t hedges against the Macquarie scenario of further tightening. The ING scenario of a larger surplus would require quota evasion or relaxation, which is a risk but not the base case. Layer in partial coverage now to protect against the tightening trajectory that the data supports.