LME nickel prices decline amid supply concerns
Indonesia plans selective quota additions for smelters
London Metal Exchange (LME) three-month nickel prices declined 1% w-o-w to $16,785/t in the week ended 14 August 2026, from $16,950/t a week earlier. The decline came amid continued uncertainty over Indonesia’s revised nickel mining quotas, with market participants concerned that additional allocations could increase ore supply. Meanwhile, LME nickel inventories remained broadly stable at 264,732 t, compared with 264,444 t a week earlier.
Indonesia plans selective quota additions
Indonesia plans to grant additional nickel ore production quotas selectively to smelters facing raw material shortages, according to the Indonesia Nickel Miners Association (APNI). Overall 2026 nickel ore production allowances are expected to remain around 260-270 million tonnes, significantly below the 379 million tonnes approved in 2025.
Between January and July, domestic nickel ore consumption reached 142.96 million tonnes, equivalent to around 53-55% of the annual quota.
APNI has recommended allowing an additional 30 million tonnes of nickel ore production as a strategic buffer, potentially taking the total allocation to around 300 million tonnes. The additional supply is intended to support new smelting capacity expected to come online this year.
Indonesia has around 80 nickel smelters, which could collectively require approximately 315 million tonnes of nickel ore annually if operating at full capacity.
Quota transparency remains a key concern
APNI has called for greater transparency and clear rules governing nickel ore quota revisions, citing recent market volatility caused by uncertainty surrounding individual company allocations.
The association said a transparent, rules-based framework would help reduce market reactions to quota-related rumours and government decisions.
Indonesia’s Energy and Mineral Resources Ministry reiterated that the government aims to maintain resource sustainability while supporting commodity prices. The ministry also highlighted the need to consider domestic smelter requirements and overall supply-demand conditions when determining additional allocations.
Indonesia to launch strategic commodities exchange
Indonesian President announced that the country plans to launch a Strategic Minerals and Commodities Exchange on 1 January 2027, under the supervision of financial regulator OJK.
The exchange is intended to establish Indonesian reference prices for key export commodities, including nickel, tin, coal, gold and palm oil. The government aims to reduce reliance on overseas price benchmarks and create a more transparent domestic commodities market.
However, implementing rules and the precise scope of the exchange have yet to be defined.
Outlook
Nickel prices are likely to remain volatile in the near term as market participants await greater clarity on Indonesia’s revised 2026 nickel ore quotas. While selective additional allocations could support smelters facing shortages, expectations of a potential 30 million-tonne strategic buffer could add to supply concerns.
The direction of LME nickel will therefore remain closely linked to Indonesia’s quota decisions, domestic smelter requirements, ore availability and inventory movements.
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