- Indonesia proposes 34% cut in nickel ore output
- APNI plans export diversification away from China
Benchmark nickel prices on the London Metal Exchange (LME) rose 1.5% to close at $14,803/t in the week ended 19 December, boosted by news of cuts in ore production for 2026 from Indonesia, the world’s largest nickel producer. Prices were volatile in the week, as a rate cut in the US failed to lift market sentiments, pushing prices to an intra-week low of $14,263/t on Tuesday, before rising steadily through the remaining trading sessions on news of the production cut. LME nickel inventories edged higher to 254,550 t from 253,032 t, signaling ample availability that tempers upside potential.
Market updates
Indonesia signals potential nickel output cuts
Nickel prices extended gains for a third session after Indonesia proposed slashing 2026 nickel ore production by over 34% to 250 million tonnes (mnt) from this year’s 379 mnt target, responding to the metal’s three-year price slump due to a supply glut. The move, announced in the Indonesian Government’s 2026 Work Plan and Budget, includes plans to revise ore pricing to impose separate royalties on cobalt byproducts.
The country’s Ministry of Energy and Mineral Resources plans to overhaul its nickel ore benchmark pricing in early 2026, treating cobalt byproducts as separate commodities liable for royalties. The move is expected to significant;y boost nickel prices through 2026, and we expect LME prices to outperform other base metals as the come off record highs.
APNI eyes India to reduce China dependence in stainless steel exports
The Indonesian Nickel Miners Association (APNI) plans to diversify stainless steel exports by shifting 30-40% of shipments to India, reducing its heavy reliance on China, which currently absorbs nearly 90% of output. APNI views India as a fast-growing consumption market and stressed the need for balanced trade partnerships. The association also highlighted price distortions in China-linked trade, citing unaccounted mineral values in nickel ore, and urged broader valuation reforms to strengthen down streaming and state revenues.
Nornickel: Nickel supply exceeds demand by 200,000 t in 2025 & 2026
Norilsk Nickel (Nornickel) has projected a global nickel market surplus of 200,000 t in both 2025 and 2026, highlighting continued supply-side pressure despite improving demand prospects. The forecast broadly aligns with the International Nickel Study Group’s (INSG) outlook for 2025, though it is around 60,000 t lower than INSG’s surplus estimate for 2026.
While demand growth is expected to remain firm, particularly from battery and energy-transition sectors, rapid supply expansion in Indonesia continues to outpace consumption growth, emerging as the primary driver of the projected oversupply.
Tanzania’s Kabanga emerges as strategic nickel asset
Tanzania’s Kabanga deposit ranks among the world’s largest high-grade nickel resources, holding about 64 mnt of nickel ore crucial for EV batteries. The high-grade sulphide ore offers cleaner extraction potential amid surging global demand, positioning Tanzania as a key future supplier despite infrastructure challenges. Local policies aim to maximize community benefits through jobs and development.
Outlook
While inventories are expected to rise, we expect Indonesia’s supply cuts to significantly support prices through December. Price rises will be capped by the rise in inventories, however, any uptick in demand will shift the focus firmly on supply-side fundamentals, boosting prices.
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