Nickel Futures Slide Further

Nickel futures fell to around $17,100 per tonne in early March, extending losses from the previous session, as heightened geopolitical tensions in the Middle East triggered risk-off flows across industrial metals. Iran’s threat to close the Strait of Hormuz drove oil prices sharply higher, strengthening the dollar and prompting investors to trim exposure to cyclical commodities. Market participants remain cautious, reacting to heightened risk sentiment. Meanwhile, on the supply side, Indonesia’s 2026 ore quota cap at 270 million wet metric tons and enforcement against illegal mining continue to limit tightness. New project ramp-ups, including PT Vale’s Pomalaa initial ore sales, signal steady feedstock availability. Firm Philippine ore offers support to upstream costs, but broader expansion in refined nickel output has restrained upside.

Nickel futures were at $17,800 per tonne in late February, not far from their highest in one month and holding the metal's rally that broke through in December last year amid risks of tighter 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 $17,600 per tonne, rebounding from a recent over one-month low amid steady demand from EV battery production and stainless steel manufacturing. The renewed interest comes after markets adjusted to Indonesia’s 2026 nickel ore quota cuts announced in early February, which reduced permitted output compared with 2025 and initially triggered a sharp rally before profit-taking set in. Consumption trends in China, particularly from the EV sector, continue to provide a stable demand base, reinforcing near-term pricing. Market participants are also monitoring industrial activity and regional ore allocations, which could further influence the supply-demand outlook in the coming months. While the market is still sensitive to Indonesian policy, prices remain tempered by ample global supply and limitations in refining capacity, which could weigh on further gains if these factors persist.