LME three-month nickel settled at $16,824 per tonne on June 26, according to official LME data, with the CFD benchmark tracked by TradingEconomics at $16,672.75/t, down 1.14% on the day. The metal has shed 11.74% over the past month, retreating sharply from the early-May rally that pushed prices above $19,600/t on momentum-driven buying tied to Indonesian policy signals. Year-over-year, nickel is still up 9.76%, but the longer view is less favorable: prices remain well below the $20,000+ levels of early 2024 and are trading near the marginal cost of production for many non-Indonesian producers.
The market is locked in a standoff between Indonesian supply management and the relentless build of global surpluses. The International Nickel Study Group (INSG) projects a 261,000-tonne surplus in 2026, following surpluses of 209,000 tonnes in 2025 and 112,000 tonnes in 2024. Global primary nickel production is forecast to reach 4.085 million tonnes in 2026, with Indonesia alone accounting for approximately 65% of global mined output. The US Geological Survey estimated Indonesian production at 2.6 million tonnes in 2025, up 13.9% year-on-year, and Mining-Technology projects global output to rise a further 9.4% in 2026.
Indonesia's policy intervention has become the market's defining variable. On January 14, an energy ministry official confirmed that 2026 mining permits would be cut to 250-260 million wet tonnes of ore, down sharply from 379 million tonnes in 2025. This 31-34% reduction represents an attempt to manage prices in what BMO Capital Markets analysts have described as Indonesia behaving like an "OPEC of one" in nickel. The government has also shortened quota validity from three years to one year and introduced mine rehabilitation requirements, adding regulatory friction. Reuters notes that the Indonesian Nickel Miners Association suggested a 2026 ore cap of about 250 million tonnes.
The impact of the quota cut has been partially offset by the continued ramp-up of new processing capacity. Chinese-backed HPAL (high-pressure acid leach) and NPI (nickel pig iron) projects continue to expand, and Indonesia exported nearly 80% more nickel cathode in the first three quarters of 2025 compared with the same period in 2024. ING reports that Chinese and Indonesian-origin metal now accounts for 75% of LME available tonnage, up from 55% in January 2025. This dominance has transformed nickel from a market defined by Western producers into one where Jakarta and Beijing set the supply trajectory.
Demand growth remains bifurcated. Stainless steel, which consumes more than 60% of global nickel, is growing sluggishly amid weak construction activity in China and trade friction. The battery sector, which the IEA estimates consumed 370,000 tonnes of nickel in 2023 (over 10% of total demand), continues to expand at 20-30% annually. However, the rising share of LFP (lithium iron phosphate) batteries — which contain no nickel — is moderating that growth. LFP batteries accounted for over 55% of EV battery deployment globally in 2025, up from under 50% in 2024, according to the IEA. This chemistry shift reduces nickel intensity per vehicle even as total EV sales grow.
Analyst views are converging on a rangebound outlook with upward drift. Goldman Sachs, after the Indonesian quota cut, raised its 2026 average forecast by 16% to $17,200/t, citing an 11% reduction in mine supply and a higher cost floor. ING takes a more cautious view at $15,250/t, emphasizing elevated inventories and soft stainless steel demand. The Consensus Economics survey shows analysts expecting $16,000/t by December 2026 and $17,000/t by December 2027. PricePedia's scenario sees a gradual recovery path to $16,500/t by end-2026 and $17,500/t by end-2027, consistent with the view that the surplus will slowly erode rather than abruptly reverse.
For procurement teams, nickel presents a different calculus than other base metals. The structural surplus and high LME inventories cap upside risk, making aggressive hedging unnecessary. Buyers of stainless steel should expect stable to slightly lower input costs through H2 2026. Battery manufacturers and cathode producers face a more complex picture: the Class 1 nickel market (high-purity nickel for batteries) is structurally tighter than the overall nickel market, with some analysts projecting a deficit in battery-grade material as early as 2027. Secure long-term offtake agreements with producers outside Indonesia to diversify supply concentration risk. For stainless steel buyers, the current environment favors spot purchasing or short-term contracts. The Indonesian quota experiment is worth watching closely — if Jakarta successfully manages output to support prices around $17,000-18,000/t, the current dip could represent a buying opportunity before the quota constraint becomes binding in H2.
For procurement teams, nickel presents a different calculus than other base metals. The structural surplus and high LME inventories cap upside risk, making aggressive hedging unnecessary. Buyers of stainless steel should expect stable to slightly lower input costs through H2 2026. Battery manufacturers face a more complex picture: the Class 1 nickel market is structurally tighter than the overall market, with some analysts projecting a deficit in battery-grade material as early as 2027. Secure long-term offtake agreements with producers outside Indonesia to diversify supply concentration risk. The Indonesian quota experiment is worth watching closely — if Jakarta successfully manages output to support prices around $17,000-18,000/t, the current dip could represent a buying opportunity before the quota constraint becomes binding in H2.