Nickel Falls on Weak Demand, Elevated Stocks

Nickel traded below $16,750 per tonne, remaining under pressure as elevated inventories and weak downstream demand weighed on prices. LME warehouse stocks were around 271,000 tonnes in early September, while soft stainless steel demand continued to weigh on nickel consumption. Indonesia’s 2026 nickel ore quota was cut to 260–270 million tonnes from 379 million in 2025, but Philippine ore imports reached 11.4 million tonnes in January-July, up from 6.82 million a year earlier, helping keep Indonesian smelters supplied and offsetting some of the impact of the lower quota. Moreover, stronger US jobs data lifted expectations for a September Fed rate hike, keeping higher yields and a stronger dollar as additional headwinds for nickel. Meanwhile, lower cobalt payables for Indonesian MHP are squeezing HPAL margins and could prompt higher-cost producers to reduce output, offering some medium-term supply support.

Nickel traded around $16,900 per tonne, rebounding from an over one-month low as potential production cuts at Indonesia’s largest nickel-processing hub raised concerns over a tightening supply outlook. Indonesia Morowali Industrial Park (IMIP) said El Niño-driven water shortages could reduce production by 30%-40% if new water sources are not secured, raising concerns over global availability. Some Chinese-backed nickel producers are also considering coordinated output cuts of around 30% at HPAL plants amid weak prices and rising operating costs, although no agreement has been reached. Indonesia’s tighter 2026 mining quota further points to lower ore availability, with the limit set at around 260-270 million tonnes vs 379 million tonnes in 2025. Meanwhile, elevated inventories and weak Chinese demand continued to weigh on prices, while higher imports of Philippine nickel ore into Indonesia could help offset tighter domestic supply.

Nickel traded around $16,680 per tonne, reaching its lowest level since early July, as ample near-term supply weighed on prices. Indonesia imported 11.4 million tonnes of nickel ore from the Philippines in January-July, up from 6.82 million tonnes a year earlier, indicating continued feedstock availability for Indonesian smelters despite tighter mining quotas. Additionally, MHP supply recovered somewhat as sulfur arrivals improved production at some Indonesian projects, while weak nickel sulfate prices pressured payables, suggesting tighter ore availability has yet to cause a broad shortage across the processing chain. At the same time, LME nickel inventories rose to 268,314 tonnes at end-August, keeping a sizeable stock overhang. Meanwhile, Indonesia’s 2026 mining quota is reportedly down to 260–270 million tonnes from 379 million tonnes in 2025, while producers are considering HPAL cuts of around 30%, which could further limit downside if implemented.