Nickel slips as uncertainty clouds Indonesia supply curbs
Saturday, January 10 2026 - 08:33 AM WIB
Indonesia’s dominance of global nickel supply has put government policy at the centre of the market, with prices surging after officials flagged output curbs late last year but easing as details remain unclear.
Nickel prices have risen more than 30% since Indonesia signalled plans to restrict mining in December 2025. Earlier this week, prices briefly touched $18,800 a metric ton, the highest level since June 2024, before retreating toward $18,000.
The rally has since lost momentum amid uncertainty over how the government will implement production quota cuts.
Three-month nickel contracts on the London Metal Exchange (LME) fell as much as 5.9% on Wednesday and closed down 3.4%, according to Bloomberg data. Prices extended losses on Thursday, ending down 4.1% at $17,155 a ton.
Indonesia has said it aims to rein in nickel output to improve the balance between global supply and demand. However, the Energy and Mineral Resources Ministry has yet to announce details of the 2026 mining quotas under companies’ work plans and budgets (RKAB).
Energy and Mineral Resources Minister Bahlil Lahadalia has said the quota figures are still being finalised, raising doubts in the market about the durability of the recent price surge.
Read also: Nickel prices surge on Indonesian curbs, but policy U-turn risk looms
Macquarie analyst Jim Lennon said pressure on the government to soften the policy would be strong, particularly as new projects are scheduled to start operations this year.
“Cutting quotas is essentially telling Chinese companies that have built these facilities that they cannot operate them, which would undermine future investment,” Lennon said.
Beyond Indonesia’s policy outlook, rising global inventories continue to weigh on nickel prices. Stocks in LME-approved warehouses have jumped more than 300% since early 2025 to 275,634 metric tons, while off-warrant inventories –or nickel potentially entering the LME -- stood at 112,028 tons, nearly double levels seen at the end of October.
Still, some analysts say the price recovery may not be over. Nickel, a key input for electric vehicle batteries and stainless steel, accounts for around 12% of Indonesia’s exports.
Prices have also been supported in recent weeks by buying interest from China amid heightened geopolitical tensions.
MNC Sekuritas analyst Raka Junico said nickel prices could bottom in 2026 before rebounding, as growth in refined supply additions is expected to slow from 2027.
“We believe this resilience reflects a proactive response on the supply side, including production restrictions and temporary shutdowns of smelting operations amid persistent margin pressure due to high nickel ore prices,” he said in a research note on Wednesday (7/1), as quoted by Bisnis.com.
Combined nickel inventories at the LME and Shanghai exchanges were up 29% year to date at about 253,000 metric tons as of September 2025, he said.
Raka added that Indonesia’s shift from a three-year to a one-year RKAB quota system marked an initial step toward tighter supply discipline.
Kiwoom Sekuritas head of research Liza Camelia Suryanata said recent price gains were partly structural, driven by Indonesia’s supply-side policies and the gradual normalisation of global inventories, although short-term volatility is likely to persist.
Editing by Reiner Simanjuntak