LME nickel at $16,610 per metric ton is now trading near the estimated production cost for roughly 25% of global nickel supply. The 75th percentile of C1 cash costs sits at approximately $15,500/mt, according to S&P Global Commodity Insights. If prices fall another $1,000-1,500, a material portion of global nickel production becomes unprofitable.
The cost structure of nickel production is highly stratified. At the bottom, Indonesian NPI producers using domestic ore have costs in the $10,000-12,000/mt range and remain comfortably profitable. These producers will not curtail at current prices. At the top, Chinese NPI producers relying on imported Philippine ore face costs of $15,000-16,000/mt and are already at breakeven or slightly below.
Australian nickel sulfide operations -- which produce Class 1 nickel deliverable against LME contracts -- have estimated costs of $16,000-18,000/mt. Several Australian nickel mines were placed on care and maintenance during the 2024 downturn when prices fell below $16,000. Those closures removed roughly 150,000 tonnes of annual production capacity, providing a precedent for what could happen if prices slide further.
The wild card is Indonesia. Even at $16,610, Indonesian NPI and matte production is profitable, which means the global surplus continues to grow. Curtailments from higher-cost producers in China and Australia may slow the surplus accumulation but are unlikely to reverse it. For a genuine market rebalancing, prices would likely need to stay below $15,000 long enough to force deeper capacity cuts.
Nickel is approaching levels where supply cuts become likely, but they won’t be sufficient to eliminate the surplus. The smart play is to secure fixed-price coverage for H2 while prices are near the cost floor — but don’t go long. The Indonesian overhang is structural, not cyclical. This is a buying opportunity for the next 6–9 months, not a multi-year low to lock in for 2027–2028.