- Indonesia exempts NPI from state-controlled export mechanism
- Weda Bay production quota cuts raise fresh ore supply concerns
London Metal Exchange (LME) nickel futures inched up during the week ended 22 May 2026, with the three-month nickel contract closing at $18,760/t compared with $18,580/t a week earlier. Meanwhile, LME nickel inventories remained broadly stable at 279,072 t against 275,778 t last week, indicating relatively balanced exchange stock levels.
NPI exemption eases immediate disruption concerns
The key development supporting market sentiment this week was Indonesia’s clarification that nickel pig iron (NPI) will be exempted from its proposed centralised state-controlled export mechanism. The move eased immediate concerns over disruptions to global stainless steel raw material supply chains, particularly for Chinese stainless steel mills that heavily depend on Indonesian NPI imports.
However, market participants noted that uncertainty still persists as ferronickel exports may continue to fall under the proposed export control framework. Industry participants remain watchful over whether future revisions could eventually bring NPI and ferronickel under the strategic commodities category, which could tighten government control over export approvals, pricing mechanisms, contracts, and foreign exchange flows.
Export policy still supports bullish nickel sentiment
Market sources indicated that even without direct export restrictions on NPI, the proposed policy continues to support bullish nickel sentiment as traders fear higher transaction friction, slower cargo movements, and reduced spot trading flexibility in the future.
Weda Bay quota cuts tighten ore supply outlook
Meanwhile, Indonesia’s nickel ore supply outlook also tightened after PT Weda Bay Nickel (WBN) announced preparations for temporary mine suspension following a sharp reduction in its 2026 RKAB (work plan) quota to 12 mwmt (million wet metric tonnes) from 42 mwmt previously. The company indicated that mining operations may gradually slow after most of the allocated quota was utilized during Q1.
Industry participants believe lower Weda Bay output could tighten ore availability for the Indonesia Weda Bay Industrial Park (IWIP), potentially increasing dependence on ore supplies from Sulawesi and the Philippines. The development is expected to keep nickel ore and NPI prices supported in the near term amid already tightening Indonesian ore availability and stricter RKAB approvals.
Outlook
Nickel market sentiment is expected to remain cautiously bullish in the near term amid continued uncertainty surrounding Indonesia’s export policy framework, tighter production quota approvals, and slowing ore availability. Although the exemption of NPI from the centralised export mechanism has eased immediate supply disruption concerns, market participants remain watchful over future regulatory changes involving ferronickel and other nickel intermediates.
At the same time, production risks at Weda Bay and tightening Indonesian ore supply are expected to support firm NPI and nickel ore prices. However, relatively stable LME inventories and cautious stainless steel demand from China may limit any sharp upside in nickel prices in the short term.
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