- Indonesia supply concerns drive market optimism
- Chinese stainless futures support sentiment rebound
Benchmark nickel prices on the London Metal Exchange (LME) surged 6% to close at $15,670/t in the week ended 23 December, marking the metal’s strongest weekly gain in nearly two months. The rally was driven by renewed supply-side concerns from Indonesia and growing expectations of US interest rate cuts in 2026, which outweighed stable inventories and subdued downstream demand. LME-monitored nickel stocks remained largely unchanged at 254,604 t, highlighting that the price rise was sentiment-led rather than inventory-driven.
Market updates
Indonesia’s supply discipline narrative gains traction
Nickel prices extended gains for a fourth consecutive session after markets began pricing in Indonesia’s proposed restrictions on future ore output and new mining capacity. While the production cuts are aimed at 2026, the policy shift reinforced expectations of tighter medium-term supply following a prolonged period of oversupply, triggering short-covering and speculative buying on the LME.
Fed rate-cut expectations offset strong dollar pressure
Nickel prices moved higher despite lingering strength in the US dollar, as market expectations grew that the US Federal Reserve could cut interest rates twice in 2026. Lower rate expectations supported risk appetite across base metals, amplifying nickel’s upside move and contributing to a sharp rebound from October-end lows.
China stainless futures rebound lifts sentiment
A recovery in Chinese stainless steel futures provided additional price support, improving near-term market sentiment even as physical stainless demand remains weak. The futures-led optimism contrasted with muted spot buying, underlining the disconnect between paper markets and underlying consumption.
Inventories stable, surplus concerns persist
Despite the price rally, LME inventories stayed elevated and broadly flat w-o-w, while refined nickel availability remains ample. This underscores that the recent price spike has not been driven by tightening physical supply but by expectations and positioning ahead of potential policy shifts.
Outlook
Nickel prices are likely to remain volatile with a slightly upward bias in the near term, supported by Indonesia’s supply cuts and easing monetary policy expectations. However, persistent oversupply, high refined nickel inventories, and weak stainless steel demand are expected to cap further upside
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