LME nickel found a tentative footing at $16,660 per metric tonne on June 26, a modest 0.3% gain after three consecutive sessions of declines that pushed the metal below $17,000 for the first time since early 2024. The stabilization doesn’t signal a reversal, but it does suggest the market is approaching levels where supply responds. SHFE nickel rose 0.8% to ¥147,620 per tonne, tracking a similar pattern of cautious buying near perceived floors.
The production cost curve is becoming the dominant narrative. Chinese nickel pig iron (NPI) producers using Philippine nickel ore have estimated cash costs of $15,000-16,000 per metric tonne of contained nickel. At $16,660, LME nickel is now within $1,000-1,600 of that floor. Australian sulfide nickel producers have higher costs — roughly $18,000-20,000/mt — and are already underwater. BHP’s Nickel West and Glencore’s Murrin Murrin are both reported to be reviewing operations.
Indonesian supply continues to grow, which is why the market is in surplus. Indonesia produced an estimated 1.9 million tonnes of nickel (contained) in 2025 and is on track for 2.1 million tonnes in 2026. New HPAL (high-pressure acid leach) projects are adding capacity for battery-grade nickel, while NPI and matte production for stainless steel continues to expand. The supply growth trajectory remains steep, but the question is whether low prices slow the pace of new investment.
LME inventories at roughly 52,000 tonnes are up slightly from last week but remain low by historical standards. The inventory build has been concentrated in SHFE warehouses, where stocks have risen to over 30,000 tonnes as Chinese production outpaces domestic demand. The global nickel market surplus is estimated at 150,000-200,000 tonnes for 2026.
Nickel at $16,660/mt is approaching the cost floor for a significant portion of global production. Buyers with nickel exposure should recognize the asymmetry: Indonesian supply growth keeps a lid on prices, but the floor is getting closer. For stainless steel buyers, NPI-linked contracts are the most cost-effective option. For battery-grade (Class 1) nickel buyers, the current price represents a discount to the production cost of most non-Indonesian supply. Consider locking in Class 1 nickel for H2 2026 at these levels — if Australian or New Caledonian production is curtailed, Class 1 premiums could widen.