Producers at Indonesia's largest nickel industrial park will coordinate output cuts, Nickel Industries said, as nickel prices sit near their lowest since late 2025. Chinese operators are weighing cutting one battery-material product in half and another key nickel product by a fifth, Reuters reported.
At a glance
- Nickel Industries' managing director said there will be coordinated cuts across all operations in the Morowali park.
- Sources say Chinese producers are weighing a 50% cut to MHP and a 20% cut to nickel pig iron.
- Nickel has fallen nearly 25% from this year's peak of $20,000 a tonne.
Background
Indonesia produced about two-thirds of the world's mined nickel in 2025, according to the US Geological Survey, much of it in plants run by Chinese companies. The Indonesia Morowali Industrial Park (IMIP) on Sulawesi is one of its main production hubs. Nickel pig iron (NPI) is a low-grade nickel used to make stainless steel, while mixed hydroxide precipitate (MHP) is an intermediate used to make chemicals for EV batteries.
What happened
"There will be coordinated cuts across all of the operations within the IMIP," Nickel Industries managing director Justin Werner told analysts on an earnings call, Reuters reported on October 22. He did not say how large the cuts would be.
Chinese producers met earlier this week to discuss reductions, people familiar with the matter told Reuters. They are weighing halving output of MHP and cutting NPI output by 20%, though they have not decided the size or length of any cuts. The companies involved include Tsingshan Group, Huayou Cobalt, Lygend Resources, CNGR and GEM.
Why producers are cutting
Prices have fallen while costs have risen. Nickel dropped nearly 25% from this year's peak of $20,000 a tonne to $15,070 last week, its lowest since December 2025, and NPI prices have fallen too. At the same time, producers face sulphur shortages and tighter Indonesian limits on how much nickel ore can be mined.
Non-integrated producers, which buy their ore rather than mine it, "are the ones that are going to suffer the hardest," Werner said. Nickel Industries has already cut its own Indonesian NPI output to 75% of capacity this month. It has also delayed the ramp-up of another project because of a lack of rainfall linked to El Niño.
What it means
Because Indonesia dominates world supply, coordinated cuts there could tighten the market for both stainless-steel feedstock and battery materials. The key unknowns are how deep the cuts will be, how long they last, and whether they count reductions already under way.
Our read
Outlook: bullish. Coordinated cuts in the country that mines about two-thirds of the world's nickel would reduce supply, though their size is not yet decided.
What to watch
- An announcement on the size and length of the cuts by Chinese producers in Indonesia.
- Whether nickel holds above last week's low of $15,070 a tonne.
- Indonesia's nickel ore mining quotas, which are already limiting supply.
For information only, not investment advice.
Nickel price in India
metalscost.com India reference price as of 2026-10-24.
Detailed analysis
Timeline
- 2026-10-20: Chinese nickel producers in Indonesia meet to discuss coordinated cuts.
- 2026-10-22: Nickel Industries says producers in the IMIP will coordinate output cuts.
Supply Drivers
Producers are weighing a 50% MHP cut and a 20% NPI cut in the country that mines two-thirds of world nickel.
Government Policies
Tighter Indonesian ore mining quotas are raising costs for producers without their own mines.
What could lift prices
- Coordinated cuts would reduce supply from the world's dominant producer.
- Sulphur shortages and drought are already limiting output.
What could weigh on prices
- The size and length of the cuts are not decided and may include cuts already under way.
- Nickel was near its lowest since December 2025 last week, showing weak demand.
Country impact
| Country | Impact | Reason |
|---|---|---|
| Indonesia | High | Its main nickel park plans coordinated cuts as prices fall and costs rise. |
| China | Medium | Chinese companies run most of the Indonesian plants weighing the cuts. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Stainless Steel | Negative | A 20% cut to NPI would reduce a key raw material for stainless steel. |
| EV Batteries | Negative | Halving MHP output would tighten supply of a battery-chemical feedstock. |
Who gains, who loses
- Integrated nickel producers: Those that mine their own ore face less pressure than producers buying ore.
- Non-integrated producers: Werner said producers without their own ore will suffer the hardest.
Other ways this could play out
- If the full 50% MHP and 20% NPI cuts go ahead, nickel could recover from its lows.
- If the cuts turn out small or only formalise existing reductions, prices may stay weak.
Price risks
- Producers could restart output quickly if prices rise, limiting any rally.
- Weak stainless steel demand in China could outweigh lower supply.
Technical view
Price is mixed relative to its 20-period and 50-period moving averages, showing no clear trend alignment.
Computed from metalscost.com's own stored price history.
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