Nickel market could shift to deficit due to Indonesia quota, says Macquarie
Friday, March 13 2026 - 07:54 AM WIB
Nickel prices could rise further this year as a potential global supply shortage, driven by top producer Indonesia’s tighter production quotas, begins to take effect and could push the market into deficit, Mining.com reported, citing Macquarie Group.
In December 2025, the Indonesian government announced significantly stricter and more regulated nickel supply quotas in an effort to curb a global supply glut and support depressed prices. Since then, prices for nickel metal, nickel pig iron (NPI), nickel sulfate and nickel ore have all increased.
As the global market continues to tighten, Macquarie strategists led by Jim Lennon expect further upside in nickel prices, reflecting higher costs in downstream products. The bank noted that rising domestic premiums for Indonesian nickel ore have pushed NPI prices up by nearly $3,000 per tonne, supporting gains in nickel prices on the London Metal Exchange (LME).
Macquarie analysts therefore see a price floor forming around $17,000–$18,000 per tonne for LME-traded nickel, which is currently trading near the midpoint of that range.
Read also : Govt admits nickel output cap aimed at preserving reserves
Production could lag
The Australian bank also flagged additional upside risk for nickel prices, as production growth may stall this year due to Indonesia’s restrictions. This could push the global market into a deficit, compared with earlier forecasts for a 90,000-tonne surplus. Japan’s Sumitomo previously projected the global nickel surplus could reach 256,000 tonnes in 2026.
Macquarie added that a shortage of limonite ore and a recent tailings dam accident in Morowali, Central Sulawesi, are contributing to weaker-than-expected production of mixed hydroxide precipitate (MHP), an intermediate product derived from laterite ores.
Potential disruptions to sulfur supplies from the Middle East could also affect planned production if they persist, the bank said, noting that some planned capacity expansions are likely to be delayed.
During the January–February period, NPI production is estimated to have fallen about 10% year-on-year, partly due to lower ore grades and as some furnaces were switched to produce nickel matte, which has higher payables than NPI.
Editing by Reiner Simanjuntak