Nickel Futures Retreat Sharply

Nickel futures traded around $18,590 per tonne, pulling back sharply from a three-week high near $19,220, as investors locked in profits following recent gains. Additional pressure came from sluggish nickel salt transactions in China and rising inventories across parts of the supply chain, reflecting softer near-term demand conditions. However, losses were limited by ongoing supply concerns in Indonesia, where Weda Bay Nickel suspended ore production after exhausting its reduced 2026 mining quota. The company is seeking an extension after receiving an initial allowance of 12 million wet metric tons this year, sharply below the 42 million tons produced in 2025, reinforcing concerns over ore availability. At the same time, India is preparing incentives for domestic nickel processing, highlighting expectations for longer-term growth in battery-material demand.

Nickel futures traded above $19,200 per tonne, extending gains to near a one-month high, as tightening supply conditions supported prices. The market was buoyed by declining LME nickel inventories and fresh mining disruptions, including Zimbabwe's restriction on nickel exports, which reinforced expectations of tighter global supply. Further support came from persistent constraints across the nickel supply chain. Market participants continued to monitor tight ore quotas in Indonesia and limited mixed hydroxide precipitate (MHP) availability, while some producers maintained output cuts amid elevated costs, limiting supply growth. Meanwhile, demand remained relatively resilient. China's manufacturing PMI held at the expansion threshold of 50.0 in May, while expectations for continued growth in the electric vehicle sector supported the outlook for nickel consumption.

Nickel futures climbed back above $19,000 per ton, recovering from a near four-week low of $18,555 on May 18, after reports of additional output reductions in Indonesia, the world’s largest producer. According to Shanghai Metals Market, around 10% to 15% of high-grade nickel pig iron capacity at the Weda Bay Industrial Park is set to undergo rotational maintenance in the coming months. The report also noted that some NPI production used in stainless steel has already been reduced since March and April due to weaker ore availability and elevated costs, while shifting power allocation toward new aluminium projects has further tightened supply conditions. Indonesia has lowered nickel ore mining quotas this year in an effort to support prices, leading to raw material shortages and forcing cutbacks at local smelters. The country produces more than half of global nickel output, supported by significant Chinese investment.