Nickel jumped 4.1% on the London Metal Exchange on Wednesday on talk of output cuts by Chinese producers in Indonesia. Indonesia's tight mining quotas are already forcing its smelters to import record amounts of nickel ore from the Philippines, Reuters reported.
At a glance
- Indonesia's ore imports from the Philippines rose 65.8% to 13.52 million tonnes in the first eight months of 2026.
- Analysts expect full-year imports of 20 million to 25 million tonnes, a record for a fourth straight year.
- Indonesia capped this year's nickel ore output at 260 million to 270 million tonnes to support prices.
Background
Indonesia is the world's largest nickel producer, and Chinese-owned smelters operate many of its processing plants. Each year it sets mining quotas, known as RKAB, which cap how much ore can be dug. Nickel is used mainly in stainless steel and in electric-vehicle batteries.
What happened
Three-month nickel on the LME rose 4.1% to $16,310 a ton on Wednesday, its highest in more than three weeks and the best performance among base metals. Shanghai nickel also rose, extending a four-day winning streak, according to Shanghai Metals Market.
"The catalyst is the prospect of coordinated production cuts by Chinese producers operating in Indonesia," said Neil Welsh, head of metals at broker Britannia Global Markets. Earlier this month, Indonesia discussed a moratorium on new plants that produce partly processed nickel.
Why Indonesia is short of ore
Jakarta sharply cut its nickel ore quota this year, to 260 million to 270 million tonnes, to curb oversupply and support prices. Mining minister Bahlil Lahadalia said earlier this month that Indonesia will keep controlling the quota. That has left smelters scrambling for ore elsewhere.
Imports from the Philippines jumped 65.8% to 13.52 million tonnes in January-August, official data show. Nine analysts and two traders surveyed by Reuters expect 20 million to 25 million tonnes for the full year, up 30.5% to 63.1%. Falling ore grades add to the squeeze, because smelters need more ore for the same metal, said Mysteel analyst Tom Fan.
What it means
Indonesia rarely bought ore from its neighbour until quota delays and mine suspensions in 2023 changed trade flows. Analyst Han Jianbiao of Zhonglianjin said the imports would become "a new normal" unless Indonesia eases its quotas or the Philippines restricts exports.
For the nickel market, Indonesian policy is now the main price driver. Tighter quotas and any cuts by Chinese-run smelters would reduce supply from the country that dominates world output.
Our read
Outlook: bullish. Indonesia's quota cuts and possible output cuts by its Chinese-run smelters would tighten supply from the world's largest producer.
What to watch
- Whether Chinese producers in Indonesia confirm coordinated output cuts.
- Indonesia's decision on a moratorium for new nickel processing plants.
- The 2027 RKAB mining quotas and any extra quotas for smelters short of ore.
For information only, not investment advice.
Nickel price in India
metalscost.com India reference price as of 2026-11-01.
Detailed analysis
Timeline
- 2026-10-21: LME nickel jumps 4.1% to $16,310 a ton on talk of output cuts in Indonesia.
- 2026-10-21: Reuters reports Indonesia's nickel ore imports from the Philippines are set for a record in 2026.
Supply Drivers
Indonesia's 260-270 million tonne ore quota and possible smelter cuts are tightening nickel supply.
Government Policies
Jakarta is using mining quotas, and possibly a moratorium on new plants, to support nickel prices.
Mining Production
Falling ore grades in Indonesia mean smelters need more ore to produce the same amount of nickel.
What could lift prices
- Indonesia says it will keep controlling mining quotas to support prices.
- Coordinated cuts by Chinese-run smelters in Indonesia would reduce supply.
What could weigh on prices
- Record Philippine ore imports keep Indonesian smelters supplied.
- Extra quotas could still be granted to smelters running low on ore.
Country impact
| Country | Impact | Reason |
|---|---|---|
| Indonesia | High | Its quota policy is now the main driver of nickel prices. |
| Philippines | Medium | Its ore exports to Indonesia are heading for a fourth straight record. |
| China | Medium | Chinese-owned smelters in Indonesia may coordinate output cuts. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Stainless Steel | Negative | Higher nickel prices raise costs for stainless steel makers. |
Who gains, who loses
- Philippine nickel miners: Indonesian smelters are buying record amounts of their ore.
- Indonesian smelters short of ore: They must import costlier ore while quotas stay tight.
Other ways this could play out
- If Chinese producers confirm cuts, nickel could extend its rally.
- If Indonesia grants extra quotas, the ore squeeze and the price rally could ease.
Price risks
- Talk of output cuts may not turn into actual reductions.
- Weak stainless steel or battery demand could cap any rally.
Technical view
Price is trading below both its 20-period and 50-period moving averages, a bearish alignment.
Computed from metalscost.com's own stored price history.
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