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Nickel prices rose over 1.5% this month after Indonesia reduced its mining quotas by 120 million tons, tightening supply expectations. Despite the cut, market sentiment remains cautious amid persistent oversupply, with LME inventories rising to over 236,000 tonnes this year. The International Nickel Study Group (INSG) forecasts a global surplus of 209,000 tons in 2025 and 261,000 tons in 2026 as production continues to outpace demand. Sumitomo Metal Mining also projects surplus conditions ahead, with Indonesian output expected to climb. Meanwhile, the government shortened mining permit validity to one year, aiming for tighter output control to stabilize prices.

Key Highlights

Nickel prices gained over 1.5% in a month.

Indonesia slashed nickel mining quotas by 120 million tons.

INSG forecasts a 209,000-ton global surplus in 2025.

LME nickel inventories surged to 236,000 tonnes in 2025.

Indonesia tightens mining permit rules to control output.

Nickel prices advanced by over 1.5% this month as the Indonesian government reduced nickel mining quotas by 120 million tons, capping this year’s output at 150 million. The move is expected to curb global supply by nearly 35%. However, the overall market tone remains cautious, as lower bidding prices indicate traders still view the nickel sector as oversupplied. LME warehouse inventories have risen by 71,000 tonnes this year to 236,000 tonnes, while total stocks including off-warrant metal are now above 300,000 tonnes — the highest since 2020.

The International Nickel Study Group (INSG) forecasts a global surplus of 209,000 tons in 2025, widening to 261,000 tons in 2026, as production continues to outpace demand. Global nickel output is expected to rise from 3.81 million tons in 2025 to 4.09 million tons in 2026, led by Indonesia’s expanding refining sector. Meanwhile, global demand is projected to grow modestly to 3.82 million tons in 2026, driven mainly by stainless steel consumption, while battery demand growth slows amid rising use of LFP batteries that contain no nickel.

In related developments, Indonesia shortened the validity of mining production quotas (RKABs) to one year from three, effective October 3. The move aims to increase government control over output levels and support commodity prices. Miners must now reapply annually and provide proof of land rehabilitation funds before permit approval.

Finally, nickel’s short-term gains reflect tighter Indonesian policies, but persistent global oversupply and slower battery demand suggest prices may remain capped despite supply-side interventions.

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