Shanghai Metals Market reported in May 2026 that 10-15% of high-grade nickel pig iron capacity at Weda Bay will undergo rotational maintenance in the coming months. Some NPI output in Indonesia has already been curtailed since March-April 2026 due to ore shortages and high input costs. (FACT: SMM, May 2026)
Weda Bay is not a small facility. NPI smelters there produce approximately 40,000 tonnes of contained nickel per month — roughly 480,000 tonnes annually, or about 15% of global NPI supply. A 10-15% cut removes 4,000-6,000 tonnes per month from the market, or 48,000-72,000 tonnes on an annualized basis. (FACT: Industry estimates, SMM)
The ore shortage is directly linked to Indonesia's 2026 RKAB quota cut to 250-260 million wet tonnes, down from 379 million in 2025. The reduced quota, combined with the suspension of approximately 190 mining permits in September 2025 for non-compliance, has created a bottleneck in ore supply to the country's sprawling smelter complex. High-grade limonite ore — essential for HPAL (high-pressure acid leach) production of mixed hydroxide precipitate used in battery supply chains — is particularly tight. (FACT: Macquarie Research, SMM, Indonesian Ministry of Energy)
The INSG projects a global nickel surplus of 198,000 tonnes for 2025 and approximately 260,000-288,000 tonnes for 2026, concentrated in Class 1 cathode. But those headline surplus numbers mask a growing tightness in the Class 2/NPI market. Wood Mackenzie noted that while Class 1 and nickel sulphate are in surplus, the Class 2 market — including NPI — has already moved back toward balance. (FACT: INSG, Wood Mackenzie, May 2025)
The Weda Bay cuts are the first concrete sign that Indonesia's quota policy is translating into real supply reductions. Stainless steel producers — the primary consumers of NPI — will feel this first. If the cuts deepen or if other Indonesian industrial parks follow suit, expect NPI premiums over LME to widen. For buyers who source nickel for stainless production, this is the time to lock in NPI supply commitments for H2 2026. The age of cheap Indonesian nickel may not be over, but it is becoming more expensive.