Global Nickel Market Recalibrates After Explosive Trading Week

After experiencing a surge of volatility during the course of the previous week, nickel prices stabilized around US$17,900 per metric ton on the London Metal Exchange (LME) for three-month contracts. Nickel prices staged a comeback to their current levels after dipping mid-week. Overall, nickel prices increased approximately 7 percent from the previous week to come close to a 19-month high.

Nickel prices experienced a sharp increase on January 7, 2017, when the price of nickel skyrocketed by more than 10 percent, representing the biggest increase in a single day in the past three years. This price surge was driven largely by increased buying activity from China, as well as renewed concern that the world's major nickel producer, Indonesia, would implement further limits on nickel production.

That rally marked a decisive shift after nearly two years of downward pressure. Nickel prices had been weighed down by Indonesia’s rapid expansion of mining and processing capacity, which flooded the market and dampened optimism around nickel’s role in electric vehicle batteries as demand growth fell short of earlier expectations.

This week’s rebound underscored just how sensitive the market remains to policy signals from Jakarta, as well as to changes in speculative positioning.

Indonesia’s policy signals shake the market
There has been a lot of talk in the news recently about Indonesia possibly tightening their mining quotas with respect to the annual RKAB approval process. According to the Minister of Mining for Indonesia, Bahlil Lahadalia, the Government wants to restrict production levels to assist with pricing and benefit from increased revenue from the sales of minerals. When you consider that approximately 70% of the total world’s nickel is produced from Indonesia, changes to these types of policies will have a significant impact on prices.

The fears of a reduction of nickel supply increased with the temporary shutdown of PT Vale Indonesia (VALE), whose parent company is Vale (NYSE: VALE). Due to a lack of government approval for the 2026 production plan, PT Vale Indonesia has paused its production at Pomalaa and Bahodopi until approval is received. According to PT Vale Indonesia, when production does resume it will be less than 30% of normal capacity, and this will not impact the overall daily production or operations of the company, and they expect to receive the necessary approvals imminently. Mining at Vale’s flagship Sorowako site continues uninterrupted.

Deputy Mining Minister Yuliot Tanjung confirmed that approvals are “currently being consolidated,” but declined to provide details on final quota levels. The uncertainty triggered a wave of short-covering, pushing prices briefly toward US$18,800 per metric ton before momentum eased.

Inventories cap upside
Rising inventories remain a key counterbalance to bullish headlines. LME-registered nickel stocks have climbed more than 300 percent since early 2025 to around 275,600 metric tons, with an additional 112,000 metric tons sitting off-warrant and potentially available to the market. This growing buffer has limited the staying power of rallies, even as prices react sharply to policy developments.

Regulatory scrutiny clouds supply outlook
Beyond Indonesia, regulatory oversight is shaping nickel’s longer-term outlook. In Europe, the European Commission has opened a Phase II investigation into the proposed US$500 million sale of Anglo American’s (LSE: AAL, OTC: NGLOY) nickel business to China-backed MMG (OTCPK: MMLTF), citing concerns over supply security for the region’s stainless steel industry.

EU competition chief Teresa Ribera said regulators will assess whether the deal could jeopardize Europe’s reliable access to ferronickel. MMG has said it will work closely with regulators and is confident it can address the Commission’s concerns, while Anglo American believes European customers would support its continued role as a ferronickel marketer if the transaction proceeds. A decision will be made by March 20, 2026.

Investors are pouring money into nickel now, and going forward; however, the investment community is more concentrated on the long-term than the short-term. A partnership between Appian Capital Advisory and the International Finance Corporation (a member of the World Bank Group), announced in August, represents a US$1 billion commitment to finance critical minerals projects and mining projects in developing countries.

Atlantic Nickel is the target for the first investment made by the partnership, to provide funding to allow Atlantic Nickel to transition to underground mining from surface mining at its producing Santa Rita nickel-copper-cobalt deposit in Brazil. Santa Rita is in Bahia state and is projected to produce approximately 30,000 metric tonnes of nickel equivalent a year and have a mine life of over 30 years. The project is owned by Atlantic Nickel, a subsidiary of Appian Capital.

From where nickel is now typically priced, with prices still well above late-2025/early-2026 levels, yet due to increasing inventories and changing policies, the market is more likely to experience its next price increase based upon how supply management/capacity controls are enforced than on demand.