Nickel Futures Extend Gains on Indonesia Quotas

Nickel futures surged to $17,900 per tonne in February, regaining ground after a speculative rally lifted futures to the 19-month high of $18,785 earlier this year, amid the outlook of tight supply. The Indonesian government announced that the quotas fore nickel ore production would be cut by more than 100 million tonnes from the previous year to a cap of 270 million in 2026. This followed statements from major miners in the Weda Bay area that production will see aggressive pullbacks, consolidating Jakarta's move and erasing chances that mining giants would still negotiate higher quotas due to the historical ambiguity on caps to wet tons. Previously, Indonesian authorities had also signaled they would crack down on illegal mining activities, magnifying the impact of lower supply. Elsewhere, prices continued to be supported by commodity funds as nickel's utility in datacenters and electrification technologies made it a proxy to bets on AI that have gained speculative ground.

Nickel futures rose to around $17,900 per tonne, following Indonesia's confirmation of sharp output cuts for 2026. The country has approved nickel ore quotas of 260–270 million tons, well below last year’s 379 million tons, aiming to curb the persistent surplus and support prices. Quotas below 270 million tons remain under last year’s production level, with issuance expected to complete by March. Additionally, Chinese smelters operating in Central Sulawesi have reportedly failed to submit mandatory investment activity reports. These incomplete filings mean authorities are unable to fully monitor production. Meanwhile, the Philippines’ DMCI Mining Corporation posted record 2.0 million WMT nickel ore output in 2025, targeting 3 million WMT in 2026, with export volumes expected to continue. This Philippine supply provides volumes available for regional markets, including China.

Nickel futures rose to around $17,400 per tonne, rebounding from a one-month low of $17,000 touched earlier in February, as markets refocused on tightening global supply conditions. The move was largely supported by ongoing supply concerns linked to Indonesia, the world’s largest nickel ore producer, which confirmed it will cut mining permits to 260 million wet tons in 2026, down from 379 million tons last year. The reduction signals tighter availability of nickel feedstock for both stainless steel and battery production, with enforcement actions against illegal mining adding to supply uncertainty. Prices also drew some support from longer-term supply diversification efforts, including progress toward a large-scale battery-grade nickel refinery in the United States and advances in alternative low-carbon nickel processing technologies in Canada, which underscore structural shifts in the global nickel supply chain beyond Southeast Asia.