- Indonesia raises Weda Bay mining quota
- Prices consolidate at elevated levels
Nickel prices witnessed sharp volatility this week, retreating after an early surge and then consolidating at elevated levels. At the start of the week, supply-side disruptions in Indonesia triggered a synchronised rally across domestic and overseas markets, with LME nickel briefly climbing back above $18,000/t on 25 February. However, gains were partially pared as the week progressed, reflecting cautious sentiment and position adjustments at higher price levels.
LME three-month nickel averaged $17,890/t in the week ended 27 February, up 3% w-o-w from $17,350/t. While, LME warehouse inventories edged higher to 287,976 t from 287,706 t, remaining broadly stable.
Macro matters
Indonesia expands output pipeline
Indonesia’s nickel supply is set to expand further through 2026, led by higher permitted output at Weda Bay. The mine’s RKAB approval was raised to 42 million wet metric tonnes (mwmt) in 2025 from 32 mwmt, supporting growing NPI and HPAL capacity. Longer term, output could ramp up toward 60 mwmt annually. Backed by China-led smelter investments and tighter annual RKAB controls from 2026
Nickel Industries also secured a 60% higher 2026 RKAB quota at Hengjaya Mine, lifting permitted ore sales to 14.3 million wmt. Saprolite will feed RKEF lines at IMIP, while limonite will supply HPAL operations, strengthening integrated value-chain control.
IndoPhil corridor signals supply coordination
Indonesia and the Philippines jointly accounting for roughly three-quarters of global nickel ore output—have formalised cooperation through the IndoPhil Nickel Corridor. While not a formal cartel, the initiative indicates a push toward supply discipline and value-chain optimisation, potentially influencing medium-term price formation.
Outlook
In the short term, nickel prices are expected to enter a phase of fluctuations. On the downside, supply disruptions in Indonesia and expectations of a supply gap provide a floor, limiting significant downside room; on the upside, persistently high inventory levels and weak spot demand present clear resistance to further rises.
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