LME nickel for three-month delivery plunged 2.9% to $16,610 per metric ton on June 25, breaching the $17,000 level that had served as support throughout Q1 and Q2. The metal has now lost 10.5% over the past month and is down 14.6% from its 2026 high of $19,450. Nickel is the weakest performer in the base metals complex this quarter.
The primary driver is Indonesian supply. Indonesia -- now responsible for 50%+ of global nickel production -- continues to expand output at a relentless pace. The country's nickel pig iron (NPI) and matte production rose an estimated 15% year-over-year in the first half of 2026, flooding the market with new supply. Indonesian nickel ore production has been supported by expanded mining quotas and new HPAL (high-pressure acid leach) facilities coming online.
The global nickel market surplus for 2026 is estimated at 180,000-220,000 tonnes by the International Nickel Study Group (INSG), following a 170,000-tonne surplus in 2025. This is the third consecutive year of oversupply, and there is no sign of it ending. New Indonesian capacity continues to start up faster than demand can absorb it.
The only bullish argument for nickel is that at $16,610, prices are approaching the cost floor for some higher-cost producers. NPI production in China, which uses imported Philippine ore, has estimated costs in the $15,000-16,000/mt range. If LME nickel falls much below $16,000, Chinese NPI output could begin to curtail, providing a natural floor.
Nickel is in structural oversupply and there’s no catalyst for a reversal in 2026. Procurement teams should be aggressive on price — this is a buyer’s market. Lock in fixed prices at these multi-year lows for H2 2026 and consider extending coverage into early 2027. The Indonesian supply machine isn’t slowing down.