LME three-month nickel settled at $16,570/mt on June 26, down $90 (0.54%) from the prior session. The contract has now fallen 11.65% over 30 days and is trading at its lowest level since Q1 2024, as the weight of Indonesian supply continues to overwhelm demand growth.
Indonesia produced 1.95 million tonnes of nickel (contained metal) in 2025, up 14% year-on-year, and output is tracking 8-10% higher through May 2026. The country now accounts for 55% of global nickel supply, with new RKEF (rotary kiln electric furnace) lines and HPAL (high-pressure acid leach) projects coming online every quarter.
NPI (nickel pig iron) prices have fallen below $11,000/mt on a CIF China basis, compressing margins for Indonesian producers. However, vertically integrated operations that control both mining and processing continue to produce at full capacity because their marginal cost sits around $9,000-10,000/mt — comfortably below current spot.
LME nickel stocks drew 0.22%, but the draw is modest relative to the supply overhang. The global nickel market was in a surplus of 215,000 tonnes in 2025, according to INSG data, and the surplus through May 2026 is tracking at 108,000 tonnes. China’s stainless steel production — nickel’s largest end-use at 65% of demand — grew only 1.8% year-on-year in May, insufficient to absorb the supply wave.
The battery-grade nickel segment shows a slightly different picture. Nickel sulfate premiums over LME remain at $1,500-1,800/mt, reflecting strong EV battery demand. However, new Indonesian HPAL capacity producing mixed hydroxide precipitate (MHP) is increasingly able to serve this market, narrowing the premium from $2,500/mt in January.
Nickel buyers have strong negotiating leverage. LME prices are below $17,000 and unlikely to recover meaningfully given the Indonesian supply pipeline. For stainless steel buyers, push for discounts tied to NPI pricing rather than LME. For battery-grade buyers, the nickel sulfate premium is narrowing but still significant — lock in Q3 sulfate contracts now before Indonesian HPAL supply further compresses the premium. Monitor potential Indonesian export policy changes as the election cycle approaches.