Nickel on LME hits multi-month high following Indonesia supply curb signals

• Strong gains extend despite rising exchange inventories
• Ore restrictions and downstream recovery underpin prices

Benchmark nickel prices on the London Metal Exchange (LME) surged to a multi-month high of $16,540/t today, marking a sharp 6% increase from $15,670/t assessed on 23 December 2025, with these price levels last seen in March 2025.

Indonesia supply curbs drive bullish momentum

The primary catalyst behind the rally was renewed optimism surrounding nickel supply discipline from Indonesia, the world’s largest nickel producer. The government’s proposal to cut nickel output by 34% in 2026, aimed at addressing global oversupply and deteriorating ore grades, significantly lifted market sentiment. In addition, rumours of tighter nickel ore mining quotas for next year reinforced expectations of constrained raw material availability, supporting futures prices despite existing stock overhangs.

Recovery in Chinese stainless steel prices, tariff tweaks support nickel

Further upside was provided by a recovery in Chinese stainless steel prices, which improved downstream demand expectations for primary nickel. Beijing’s recent tariff adjustments, designed to stimulate domestic consumption, also lent indirect support to base metals, helping nickel prices advance even as the US dollar strengthened. The improved outlook for stainless steel margins encouraged short-covering and speculative buying across the nickel complex.

Inventories rise marginally, volatility persists

LME-monitored nickel inventories edged up marginally to 255,186 t on 29 December from 254,604 t on 23 December, indicating that physical availability remains comfortable. However, the modest stock movement failed to offset the strong supply-side narrative. The monthly average nickel price for December has already surpassed November levels, reinforcing bullish momentum.

Market participants expect nickel prices to remain firm but volatile in the short term, as Indonesia’s evolving ore policies and stainless steel demand trends continue to shape global price direction.