Nickel hits near two-year high on Indonesia supply fears
- Benchmark nickel on the London Metal Exchange traded 2.3% up at $19,540 a metric ton
LONDON: Nickel prices soared to their highest in nearly two years on Monday on worries about supplies from top producer Indonesia and shortages of sulphur needed to make the metal.
Benchmark nickel on the London Metal Exchange traded 2.3% up at $19,540 a metric ton in official rings after touching $19,540 for its highest since June 2024.
Indonesia set its nickel ore production quota, known as RKAB, at 260 million to 270 million tons for this year. That compares with a demand estimate of 340 million to 350 million tons by the nickel smelter association FINI.
“Since the end of 2025, Indonesian government policies are bringing about a major change in the supply/demand and pricing dynamics of the nickel market,” Macquarie analyst Jim Lennon said in a note.
Supply concerns were reinforced by miner Eramet saying it plans to halt production at its nickel mine in Indonesia from next month.
In its first-quarter sales statement, Eramet said it would exhaust its 12 million wet-ton allowance of nickel ore by mid-May, with its Weda Bay mine set to enter care and maintenance next month.
Analysts also expect Indonesia’s government to impose export taxes on nickel pig iron, which is mostly used to make stainless steel.
Nickel producers in Indonesia are reliant on the Middle East for 75% of the sulphur used in sulphuric acid - essential for leaching metal from ore.
The closure of the Strait of Hormuz due to the Iran war has disrupted these supplies and forced several Indonesian nickel processors to trim output.
Supplies of aluminium from the Middle East have also been disrupted. The region accounts for about 7 million tons of annual smelting capacity, roughly 9% of estimated global supply this year.
The aluminium price has climbed 12% since mid-March and is trading near four-year highs. It was down 0.1% at $3,587.5 a ton.
In other metals, copper slipped 0.3% to $13,269.5 a ton, zinc fell 1.1% to $3,433, lead was down 0.9% at $1,944.5 and tin eased 0.1% to $50,300.
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