Nickel prices extended their May rally on Wednesday as the market absorbed a pair of supply-side shocks emanating from Indonesia's Weda Bay Industrial Park — the world's largest nickel-producing region. LME three-month nickel settled at $18,806/t, up 1.3% on the session, extending a move that has seen prices gain roughly 6% over the past two weeks.
The more immediate disruption is a rotational maintenance program now underway across multiple high-grade nickel pig iron (NPI) lines at the Weda Bay complex. Sources at Mysteel and SMM report that 10–15% of the park's high-grade NPI capacity is being cycled through scheduled maintenance, removing an estimated 4,000 to 6,000 tonnes of monthly NPI output from the market. The maintenance is expected to last several weeks, with a progressive ramp-up anticipated toward mid-June.
Compounding the operational outage is a more structural constraint: PT Weda Bay Nickel (WBN), a key ore supplier to the park's smelters, has exhausted its RKAB (Rencana Kerja dan Anggaran Biaya — Work Plan and Budget) ore quota for the 2026 fiscal year. The Ministry of Energy and Mineral Resources slashed WBN's allocation by 71% — from 42 million tonnes in 2025 to just 12 million tonnes for 2026. With the quota fully drawn down by late May, the mine has suspended operations and entered care-and-maintenance.
"The Weda Bay RKAB situation is arguably the most significant supply-side event in nickel this year," said one Singapore-based metals trader. "When you combine it with the maintenance outages, you're looking at a meaningful reduction in Indonesia's deliverable NPI output just as the market was already tightening on broader quota cuts."
The WBN quota reduction is part of a wider policy shift by the Indonesian government to conserve ore resources and support domestic downstream processing margins. Jakarta has increasingly used RKAB allocations as a supply-management tool — a strategy analysts have dubbed the "OPEC of one" approach to nickel.
For buyers, the near-term implication is clear: available NPI units are becoming scarcer, and premiums for spot cargoes have firmed in recent weeks. NPI prices in China, the primary destination for Indonesian NPI, have risen to around 1,070–1,090 yuan/nickel unit, up from 1,020 yuan in early May.