Nickel’s Price Surge Is a Symptom of a Systemic Supply Shock
The latest spike in nickel, cresting at $16,560 per tonne on the London Metal Exchange (LME), is not a random blip but a deliberate outcome of Indonesia’s calculated intervention in a market that has been drowning in excess supply. With Indonesia now producing almost 70 % of the world’s nickel, its decision to slash output in 2026—tightening the issuance of mining quotas (RKABs)—is a direct attempt to realign the balance sheet of the supply side with the muted demand from the battery sector.
“Indonesia’s production is now central to the outlook for nickel prices next year.” — CNBC Indonesia
The LME data corroborates this narrative. Nickel’s 52‑week high, $16,632.8, reached on March 11, is only a fraction of the current level, yet the 52‑week low of $13,820.8 on April 6 underscores how deep the trough has been. The price today sits just below the all‑time peak yet far above the year‑earlier low, a 20 % rally in a market that has traditionally been a bellwether for industrial metals.
Why Demand Has Been “Weak” Yet Prices Rise
The battery industry, the largest consumer of nickel, has been undercut by the advent of alternative chemistries. Yet the rise in price signals that demand will not remain stagnant. When a single country dominates supply, any hint of contraction sends a clear shockwave through the price mechanism. Indonesia’s move to cut output is a textbook case of supply-side manipulation: by curtailing output, the country forces market participants to pay a premium for the scarce metal.
This is further reinforced by the LME’s own stockpiles. The warehouses have accumulated an unprecedented volume of nickel, a fact that has been ignored by many investors who still view nickel as a “weak performer” on the LME due to battery demand lagging behind expectations.
The Global Context
European traders have taken note. The dpa-AFX report from Paris, London, and Zurich highlighted that European commodity stocks were rising while defense stocks were falling, a pattern that points to a risk‑off environment that is nevertheless bullish on raw materials. Nickel, having climbed “to a high since April,” pushed the shares of London‑listed mining giants such as Anglo‑American and Glencore higher.
In an era where copper prices have spiked by 7 % at their peak, nickel is not far behind. The correlation is clear: as industrial metals rally, the miners that depend on them reap the rewards.
The Bottom Line
Indonesia’s policy shift is not merely a headline; it is a strategic maneuver that will shape global nickel prices for years to come. The market’s reaction—price rally, rising LME stocks, and bullish sentiment in mining equities—confirms that supply control can override even a weak demand narrative.
Investors who continue to view nickel as a “weaker performer” are missing the fact that the market is already priced in a near‑term supply contraction. The current price of $16,560 is not a speculative bubble but a rational valuation based on the new supply reality. Those who fail to adjust their portfolios accordingly will be left behind as the metal’s value continues to climb.
