LME nickel settled at $16,570/mt on June 27, slipping below the lower bound of its recent $16,750–18,750/t trading range. The decline reflects broader risk-off sentiment in industrial metals rather than a deterioration in nickel-specific fundamentals. The US dollar has strengthened 1.2% over the past week, and Chinese manufacturing PMI data due next week is expected to show continued contraction, weighing on the entire base metals complex. SHFE nickel fell 1.2% to CNY 145,280/mt.
The fundamental story beneath the macro noise is increasingly constructive. Indonesia's December 2025 decision to slash the 2026 RKAB nickel ore mining quota to 270 Mt WMT — down from 375 Mt in 2025 and well below the 345 Mt needed to feed installed smelting and HPAL capacity — is now being felt in physical markets. Ore grades are falling below 1.5% nickel content, forcing HPAL plants to use more sulphuric acid per unit of nickel recovered. DiscoveryAlert's June 2026 analysis estimates that HPAL production costs in Indonesia have risen 15–20% year-on-year, resetting the global cost curve higher.
Macquarie, which in late 2025 was among the most bearish voices on nickel (forecasting surplus until 2030 with prices bottoming at $15,000/t), has reversed its view sharply. In a March 2026 note, the bank raised its 2026 LME nickel forecast to $17,750/t from $15,000/t and cut its surplus estimate to 89,000t from 250,000t. Macquarie warned that “production may not rise at all this year due to Indonesia's restrictions” and the market could swing into deficit. The International Nickel Study Group (INSG), which in October 2025 projected a 261,000t surplus, has since reportedly revised its balance to a 32,000t deficit according to DiscoveryAlert sources tracking the April 2026 INSG meeting.
Demand remains steady but unspectacular. Stainless steel — which accounts for over 60% of nickel consumption — is growing at 3–4% annually, driven by Chinese and Indonesian melt shop expansion. Battery demand is recovering slowly: nickel use in EV batteries was soft in 2025 due to LFP chemistry gains, but INSG expects a re-acceleration in H2 2026 as NMC cathode production increases for next-generation EV platforms. ING notes that NMC's share of China's battery market fell to 18% in the first nine months of 2025 from 25% in 2024, but expects a modest recovery.
Nickel is a two-tier market. For stainless steel buyers purchasing NPI or ferronickel, prices remain competitive — Indonesian supply growth in Class 2 nickel is still substantial even under tighter quotas. For battery-grade nickel sulfate and Class 1 cathode buyers, the tightening Indonesia ore supply means higher input costs are coming. If you source nickel sulfate or briquettes, expect premiums to widen in H2 2026 as HPAL cost inflation passes through to refined products. Consider extending contract durations for Class 1 nickel now before the Q3 Asian buying season intensifies competition. The Macquarie floor at $17,000–18,000/t looks well-supported.