- Indonesian quotas exceed output, fuelling market oversupply
- US interest rates, Chinese stimulus to shape future price trends
Nickel prices on the London Metal Exchange (LME) inched up by 1.8% from last week, with the three-month contract closing at $15,090/tonne (t). LME nickel stocks remained range-bound, with an increase of 1.5% to 212,232 t from 209,082 t a week earlier.
The rise comes despite persistent market oversupply. Nickel inventories at the LME increased this year, by about 40,000 t to 195,000t, aligning with robust Chinese refiners in Indonesia. Despite attempts to restrict nickel supply, the market sentiment continues to be cautious, with any recovery dependent on significant improvements in end-user demand.
Market highlights
Indonesian nickel market faces persistent oversupply
Indonesia’s nickel market remained under pressure as government-approved quotas far outpaced actual production, fuelling oversupply. Pyrometallurgical ore prices weakened, while hydrometallurgical ore held steady. High-grade NPI prices were stable, but margins remained tight for smelters. Policymakers are considering interventions, but despite this, nickel prices in the near term are likely to be capped by abundant supply and cautious demand.
China’s nickel market remains firm despite persistent oversupply
China’s nickel and stainless steel markets showed tentative signs of firmness; however, overall nickel demand remained weak with persistent oversupply. The government’s policy to reduce industrial overcapacity and anticipated seasonal shifts in Philippine mining could influence supply and price trends in the coming months.
Outlook
Nickel prices last week showed mild gains but remained capped by global oversupply, especially from Indonesia, and a cautious demand outlook. The market is watching US interest rate policy, Chinese stimulus measures, and Indonesian seasonal supply changes as potential factors for any shift in nickel price momentum going forward.
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