LME three-month nickel is consolidating around $18,300 per tonne on June 10, after pulling back from an April rally that took prices above $19,000/t. The metal remains approximately 19% higher year-on-year, supported by tightening ore supply conditions in Indonesia — the world's largest nickel producer.
Indonesia cut its 2026 RKAB (Rencana Kerja dan Anggaran Biaya) mining quotas to 270 million wet metric tonnes from 375 million in 2025, a 28% reduction that has tightened ore availability for nickel pig iron (NPI) and mixed hydroxide precipitate (MHP) production. The policy shift marks a significant departure from the rapid production growth of 2023-2025.
The International Nickel Study Group now expects a 2026 market deficit of approximately 32,000 tonnes, the first since 2021. This marks a dramatic revision from earlier surplus forecasts and reflects both the Indonesian quota cuts and ongoing production curtailments at higher-cost operations globally.
Zimbabwe has introduced restrictions on nickel ore exports, further reinforcing expectations of tighter global supply. Combined with the Indonesian policy shift, these moves signal that producer countries are prioritizing domestic processing over raw ore exports, tightening the global intermediate supply chain.
The tighter supply backdrop is counterbalanced by still-elevated exchange inventories from prior years of oversupply. LME nickel warehouse stocks remain historically high, capping the upside despite improving fundamentals. The market is transitioning from structural surplus to a more balanced state, not yet to acute shortage.
Indonesia's RKAB quota cut is the most consequential supply-side development for nickel since the 2023 price collapse. The INSG deficit forecast suggests the market is rebalancing faster than anticipated. For Class I nickel buyers (LME-grade), the shift is positive for prices. For NPI/MHP buyers, watch Indonesian policy closely — further cuts would tighten the intermediate market significantly.