Global: Nickel market volatility intensifies as Indonesia reshapes supply dynamics

• Nickel prices surge on Indonesia’s quota cuts
• Stainless steel prices face cost pressure amid weak demand

SteelDaily: The global nickel market entered a volatile phase in January 2026 as prices surged to multi-month highs, driven primarily by Indonesia’s sharp shift in supply policy. LME nickel prices averaged around $18,900/t during the month, up nearly 20% since the start of the year, marking the highest level in about 19 months.

Indonesia, which controls nearly two-thirds of global nickel supply, has moved away from its earlier strategy of volume expansion toward protecting price and value. The government has finalised its 2026 mining quota (RKAB) at 250-260 mnt, down around 34% from 2025 levels and well below estimated smelter demand of about 350 mnt. This has fuelled market concerns over a potential raw ore shortfall of close to 100 mnt.

At the same time, views on the sustainability of the rally remain divided. Some market participants argue that the long-assumed nickel oversupply has been overstated, pointing to low quota utilisation rates and declining ore grades, which are raising production costs and limiting effective supply. Others caution that the current price strength may be running ahead of fundamentals, citing still-elevated LME inventories of around 280,000 t and structural demand risks from the growing adoption of low-nickel LFP batteries in the electric vehicle sector.

For the stainless steel market, higher nickel prices have translated into rising raw material costs, with nickel pig iron prices trending firmer, particularly in Asia. However, downstream demand remains subdued. Stainless steel prices in China and other Asian markets saw a brief uptick in January, but buying interest has since cooled as end users adopt a wait-and-see approach.

Outlook

Nickel prices are expected to remain volatile in the near term, with Indonesia’s February quota approvals and the pace of LME inventory drawdowns emerging as key market drivers.

Note: This article has been written in accordance with a content exchange agreement between SteelDaily and BigMint.