Nickel Retreats on Persistent Oversupply

Nickel traded around $15,900 per tonne, reversing recent gains as persistent global oversupply and subdued demand continued to constrain prices. Indonesia’s rapid expansion of nickel production has kept supply ample, while weaker stainless steel demand and the growing use of lithium iron phosphate batteries have limited consumption growth. The International Nickel Study Group expects the global surplus to widen in 2027, reinforcing the longer-term supply overhang. Meanwhile, reports of coordinated production cuts at Chinese-operated Indonesian smelters have raised hopes of tighter supply, with producers reportedly considering halving mixed hydroxide precipitate (MHP) output and cutting nickel pig iron production by 20%. Although the scale and timing of the measures remain uncertain, losses among Indonesian MHP producers strengthen the incentive to curb output, potentially tightening supply if the cuts are implemented.

Nickel traded around $16,300 per tonne, extending its rebound amid short-covering and prospects of coordinated production cuts in Indonesia. Major Chinese producers are expected to discuss output cuts at their Indonesian operations, raising hopes of tighter supply after August talks failed. However, the broader outlook remains weighed down by persistent oversupply, despite tighter Indonesian mining quotas. The International Nickel Study Group projected a 19,000-tonne global surplus in 2026, reversing its previous forecast of a 32,000-tonne deficit, with the surplus expected to widen to 70,000 tonnes in 2027. Additionally, slower-than-expected growth in battery demand, partly due to competition from lithium iron phosphate chemistries, adds to concerns that supply growth will continue to outpace consumption. The rebound's sustainability will depend on whether proposed production cuts translate into meaningful reductions in actual output.

Nickel traded around $15,900 per tonne, rebounding from its lowest level in nearly ten months as traders closed short positions following the recent decline. At the same time, easing US Treasury yields reduced concerns over tighter financial conditions, offering modest relief to commodity prices. However, high inventories, weak stainless steel demand and increased Indonesian ore supply continued to weigh on the outlook. Indonesia’s lower October nickel ore benchmarks and plans to increase production under supplementary mining quotas reinforced expectations of ample supply. The International Nickel Study Group also projected a 19,000-tonne global surplus in 2026, reversing its previous deficit forecast, with the surplus expected to widen to 70,000 tonnes in 2027. Reduced smelter purchasing further underscored weak underlying demand.