Since mid-December of last year, nickel prices have once again embarked on a sharp upward trajectory.
On January 6, the three-month nickel futures price on the London Metal Exchange surged by as much as 10.5%, approaching $18,800 per tonne, marking the largest single-day gain since late 2022. Analysts pointed to two primary drivers: firstly, the risk of nickel ore production cuts in Indonesia, the world's largest nickel supplier, and secondly, a significant wave of investment hitting China's domestic metals market. However, signs are emerging that this wave of "heating up" in the nickel market may be cooling. As of January 9, the three-month nickel futures price had retreated to $17,155 per tonne, yet still accumulating a 3.3% gain since the start of the year.
Driven by these developments, nickel-related concept stocks have collectively strengthened. By the close on January 9, Guiyan Platinum had risen nearly 16% year-to-date, while Inner Mongolia Xingye Silver & Tin Mining Co.,Ltd. had surged over 18% year-to-date.
Recently, the non-ferrous metals market has shown divergent trends, with prices for copper and aluminum repeatedly hitting new highs, while nickel, after a prolonged period of weakness, experienced a brief, sharp spike before retreating once more. Some analysts believe this divergence stems from nickel's inherent cyclical challenges coupled with recent policy disruptions from key producing regions.
Market analysis suggests that the room for further significant downside in nickel prices is currently quite limited. ING predicts that without large-scale, coordinated production cuts, or a demand recovery far exceeding expectations, nickel prices are unlikely to sustain at high levels, forecasting an average nickel price of only $15,250 per tonne for 2026.
As a key player in the global nickel industry, to what extent will Indonesia's nickel policies impact global nickel prices? How will this latest speculative frenzy in nickel evolve?
The recent surge in nickel prices has captured market attention.
This nickel rally began fermenting in mid-December 2025, with prices achieving a robust increase of over 20% within the past two weeks. On January 7, nickel prices on the London market surged more than 10% intraday, the largest intraday gain since 2022, with LME nickel breaking through the psychological $18,000 barrier. The main nickel contract on the Shanghai Futures Exchange hit the daily limit-up, rising 8% to 147,720 yuan per tonne.
Currently, both Shanghai and London nickel prices have retreated from their recent peaks. As of 6:00 PM Beijing Time on January 9, the Shanghai nickel 2602 contract was recorded at 139,090 yuan per tonne, up nearly 24,000 yuan from the low in December 2025, after having surged close to 36,000 yuan at one point. On December 17, 2025, the Shanghai nickel 2602 contract had briefly fallen below 112,000 yuan per tonne, hitting a multi-year low. It can be said that from the end of December 2025 to the beginning of this year, the main nickel futures contract staged a remarkable reversal. On the same day, LME nickel was quoted at $17,281 per tonne, up nearly 3.6% since the start of the year.
Indonesia currently controls nearly 70% of global nickel production. Notably, in December last year, Indonesia's Energy and Mineral Resources Minister, Bahlil Lahadalia, stated that Indonesia plans to cut production in 2026 to achieve a better match between supply and demand. This production cut plan directly touches the core of pricing power for this commodity.
As the global leader in nickel supply, Indonesia's policies have a ripple effect, significantly impacting the entire industry chain. Liu Jiaqi, a senior analyst for new energy and non-ferrous metals at CITIC Futures, analyzed that on one hand, Indonesia intends to reduce its 2026 nickel ore production quota (RKAB), setting it at approximately 250 million tonnes, a significant cut of about 34% compared to the 2025 level; on the other hand, Indonesia plans to adjust the pricing formula for the nickel ore benchmark price (HPM) and levy taxes on associated minerals, with a key focus on classifying cobalt, an associated mineral of nickel, as an independent commodity and imposing a royalty tax of 1.5%–2% to increase government revenue. It is noteworthy that cobalt metal in nickel ore is typically considered a by-product and not included in the trade price. Although the cobalt content is low, separate taxation will increase nickel production costs. As a resource-rich country, policy disruptions from Indonesia are causing market concerns about tightening supply and rising costs in the nickel market.
Fan Jianyuan, a nickel analyst at the New Energy Division of Shanghai Metals Market, analyzed, "The expectation of tightening supply from the Indonesian mining end is interpreted by the market as a strategic shift by the Indonesian government from the 'capacity expansion' of the past few years towards 'active regulation and price support,' directly igniting worries about a future supply shortage."
Furthermore, within the rotational trends of precious and non-ferrous metals, nickel, having long been in a state of low valuation, is encountering new growth opportunities. "Due to the previously sluggish performance of nickel prices, making it a low-valuation variety within the non-ferrous sector, when expectations of a fundamental reversal resonate with expectations of macroeconomic sentiment repair, nickel prices have demonstrated strong price elasticity," Liu Jiaqi stated, adding that, for example, the total daily trading volume for Shanghai nickel contracts can reach 1 to 2 million lots.
Additionally, Xu Aidong, Chief Expert at Beijing Antaike Information Technology and Special Advisor to the Nickel-Cobalt Branch of the China Nonferrous Metals Industry Association, indicated that the recent volatility in nickel prices is also being driven by a comprehensive investment boom in the Chinese metals market. Trading data shows that during Asian trading hours, trading volumes for metal products like nickel, copper, and tin on the London Metal Exchange surged, pushing prices higher; when night trading commenced on the Shanghai Futures Exchange, metal prices continued their upward trend.
Xu Aidong noted that investors in the precious metals market often adopt a "chase the rally" strategy, and judging from the recent two-day decline in nickel prices, the current investment fervor in precious metals may be subsiding.
In fact, prior to this recent market tremor, nickel prices had been consistently low.
Data shows that from 2022 to November 2025, nickel prices accumulated a 46% decline. Arif Perdanakusuma, Chairman of the Indonesian Nickel Industry Forum, previously attributed the price drop to two factors: firstly, Indonesia's rapid increase in nickel production, which has grown nearly fivefold over the past five years, leading to a global supply surplus; and secondly, global factors, including a downturn in the stainless steel industry, which accounts for about 70% of global nickel demand, and geopolitical tensions impacting global supply chains, thereby suppressing industrial demand for nickel.
In Liu Jiaqi's view, Indonesia's nickel industry policies have actually been evolving in recent years. He stated that initially, Indonesia banned nickel ore exports to attract companies to invest and build capacity locally. Consequently, from 2017 to 2024, Indonesia's smelting capacity experienced accelerated growth, a phase more focused on "downstream processing." However, as smelting capacity gradually became oversupplied and nickel prices continued to fall, Indonesia shifted its focus from relentless expansion of smelting scale to increasing national revenue. Therefore, in 2025, Indonesia reformed the Non-Tax State Revenue (PNBP) in the mining sector. Another change is that Indonesia also recognizes the risks that oversupplied smelting capacity and falling nickel prices pose to its mining and export sectors, and is thus using policy adjustments to achieve nickel price stability.
Under a series of policy interventions, Indonesia's nickel production now accounts for nearly 70% of the global total. Not only does it possess abundant nickel resources, but Indonesia also has considerable ambition in its development.
In 2022, Indonesia proposed the idea of forming a "Nickel OPEC," hoping to unite nickel resource exporting countries to influence international nickel prices through coordinated mineral policies. In recent years, the Indonesian government has continuously promoted downstream industrial policies, which have become a crucial guarantee for the country's economic revenue. Last August, Indonesian Energy and Mineral Resources Minister Bahlil Lahadalia stated that thanks to the government's nickel ore export ban and the deep development of downstream industries, the country's export value of nickel-related products soared to $33.9 billion in 2024, hitting a record high.
"Indonesia's increased policy intervention has indeed enhanced its voice in global nickel resources," Yang Lina, Head of the Nonferrous Metals, Precious Metals, and New Energy Team at Founder Cifco Futures, analyzed. She noted that Indonesia's goal is not only to become a base for stainless steel and battery raw materials but also to achieve industrial downstreamization, particularly by establishing new energy vehicle production bases, and to maximize the value-added收益 from nickel, bringing more tax revenue, employment, and market share.
Fan Jianyuan also stated that Indonesia's nickel industry development has clear strategic considerations. Since the ban on raw ore exports in 2019, the core objective of Indonesian policy has been to extend the industrial chain downstream and maximize resource value-added. Even during periods of low prices, continued production expansion was aimed primarily at securing raw material supply for its vast domestic smelting, stainless steel, and even battery materials industries, and consolidating its position as a core hub in the global supply chain. Now, having established an absolute advantage in capacity, Indonesia is beginning to seek control over prices and profits. Cutting quotas and incorporating cobalt into the nickel ore pricing formula for taxation are both measures to enhance the overall收益 from resource development.
However, the challenge Indonesia may face next likely comes from persistently weak demand on the consumption side.
It is understood that the downstream applications of the nickel industry are concentrated in stainless steel, new energy batteries, electroplating, and alloys. Liu Jiaqi indicated that firstly, profits in the stainless steel market have weakened, leading to持续低迷 demand for nickel in this sector; secondly, in the new energy sector, although the explosive growth of ternary batteries around 2021 significantly boosted nickel demand, starting around 2023, lithium iron phosphate (LFP) batteries, due to their significant cost advantage, continuously improving energy density, and better safety performance, have gradually encroached on the market share of ternary batteries, with the current market share of ternary batteries remaining at a relatively low level of about 20%; thirdly, in electroplating and alloys, their overall consumption share of nickel is not high, making it difficult to contribute significant incremental demand.
Fan Jianyuan further stated that although the high-nickel ternary route is considered the future direction for solid-state batteries, the industry consensus is that its large-scale commercial application is expected around 2030, meaning it cannot effectively drive near-to-medium-term demand.
Recently, market concerns about tight supply for metal futures have intensified, driving sharp price increases for various industrial metals, including copper and nickel. However, while metals like copper and tin are still rising, nickel prices have quietly cooled.
Fan Jianyuan stated that the current oversupply situation in nickel has not yet been reversed. "We estimate a global surplus of primary nickel reaching 350,000 to 400,000 metric tonnes in 2026. Regarding Indonesia's current supply-tightening actions, they have temporarily been effective in curbing the price decline, but the current price increase is mainly driven by担忧情绪. Once the sentiment fades, nickel prices will likely slide again following the fundamentals."
Clearly, Indonesia's production policy has now become the core variable determining next year's nickel price trend. Market participants are closely watching the subsequent details from the Indonesian government regarding mining quota issuance to assess the implementation strength and actual scale of the production cut plan. Regarding this, Yang Lina commented that Indonesia's move to reduce nickel ore quota quantities tightens supply from its source at the mining end. If strictly implemented, it could indeed lead to a shift in nickel supply-demand dynamics from surplus towards a tight balance or even a deficit. Judging from previous official Indonesian statements, Indonesia's nickel ore demand for 2026 is estimated at 340-350 million tonnes. If Indonesia implements a 250 million tonne quota, it might be able to reverse the supply-demand structure.
Fan Jianyuan believes that in the short term, if the Indonesian quota is finalized, nickel prices might maintain high volatility. But in the medium to long term, unless Indonesia implements减产 with significant force, such as strictly controlling the quota below 280 million tonnes and persistently maintaining production cuts, it will be difficult to reverse the trend of relaxed supply. Moreover, if the demand side lacks explosive growth points, the oversupply格局 may be hard to扭转.
Nickel prices have taken off several times, capturing market attention, first in 2022 and 2023 when soaring demand from new energy batteries caused prices to spike, and now with concerns triggered by Indonesia tightening nickel supply. If nickel prices experience significant volatility again, could it trigger structural substitution?
Regarding this, Fan Jianyuan stated that nickel price changes could引发有限的、结构性的替代, but large-scale, comprehensive substitution is unlikely. Firstly, in the stainless steel sector, the nickel content in different series of stainless steel is relatively fixed. Formula switching is mainly driven by long-term cost trends and end-product performance requirements, making it difficult to change on a large scale in the short term due to nickel price fluctuations. However, extreme price volatility might affect steel mills' production scheduling ratios for the 200 series (low nickel), 300 series (high nickel), and 400 series (nickel-free). In the battery sector, the substitution of lithium iron phosphate (LFP) for ternary batteries is primarily driven by its own cost and safety advantages. High nickel prices would accelerate this process, but low nickel prices也难以逆转 the already established technological pathway preferences.
(Disclaimer: The content is for reference only and does not constitute investment advice. Investors proceed at their own risk.)
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