- Chinese producers mull production cuts at Indonesian operations
- Rising LME inventories, surplus supply forecasts constrain recovery
LME three-month nickel prices rose 4% week-on-week to $15,900/t on 23 October 2026, from $15,355/t a week earlier, as reports of potential production cuts at Chinese producers’ Indonesian operations raised supply concerns. However, elevated exchange inventories, weak stainless steel demand and forecasts of a global surplus continue to limit the recovery.
The price rebound reflects changing supply expectations rather than confirmed reductions in global nickel output. Proposed cuts remain unconfirmed, leaving their potential impact on physical availability uncertain.
Indonesian output-cut proposals support prices
Major Chinese nickel producers, including Tsingshan Group, GEM, Lygend Resources and Technology and Huayou Cobalt, reportedly discussed reducing production at their Indonesian facilities. The proposals could cover mixed hydroxide precipitate (MHP), high-grade nickel matte and nickel pig iron (NPI).
Reported reduction proposals included cuts of 50% each for MHP and high-grade nickel matte, alongside a 20% reduction in NPI output. These measures were reportedly being considered from 23 October through the end of 2026. However, the companies had not confirmed the proposed ratios or implementation schedules.
Potential NPI reductions are particularly relevant to stainless steel producers because the material is a key raw material for the sector. If implemented, lower output could tighten availability and increase feedstock costs.
Inventories, surplus forecasts cap upside
LME nickel inventories increased by 684 t week-on-week to 280,674 t, from 279,990 t. Monthly figures supplied for October showed inventories at 282,521 t, compared with 276,411 t in September. The elevated stock levels remain a constraint on sustained price gains.
The International Nickel Study Group revised its 2026 market outlook from a 32,000 t deficit projected in April to a 19,000 t surplus in October. It expects the surplus to widen to 70,000 t in 2027.
Weak demand leaves recovery dependent on supply action
Chinese nickel and stainless steel futures rose following reports of potential output cuts. On 21 October, the most-traded Shanghai nickel futures contract closed at RMB 121,090/t, up 3.05% from the previous session, while stainless steel futures gained 2.02% to RMB 13,635/t.
Nevertheless, futures gains do not establish that physical demand has strengthened. A sustained price recovery will depend on confirmation of production reductions, changes in Indonesian ore availability and stronger downstream purchasing.
Over the coming weeks, Indonesian production decisions and actual operating rates will be key indicators. Without measurable supply reductions or improved consumption, rising inventories and projected surpluses are likely to limit further gains.
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