Nickel has rebounded from six-month lows to trade at $16,950/tonne, up over 1.5% in the past week but still down 4% over the past month, according to The Hindu BusinessLine. The price direction for the current half of the year will be determined by Indonesia’s mining quota policy.
Indonesia’s Quota Policy Looms
Indonesia is considering increasing its 2026 RKAB (mining work plan and quota system) mining quota to around 360 million tonnes, up from the current 250-260 million tonnes. “While the proposal has not been confirmed by the government, it would represent the first meaningful easing of supply restrictions this year,” said Ewa Manthey, commodities strategist at ING Think. If implemented, it would mark another shift in Indonesia’s nickel strategy and further cement the country’s role as the key driver of global nickel market sentiment, she added. Indonesia accounts for 60% of global refined nickel supply.
BMI, a unit of Fitch Solutions, expects Indonesia to adopt a more flexible policy stance in the coming months to ease concerns over feedstock availability and support production growth, which should weigh on prices relative to H1 2026 levels.
Price Forecasts and Market Balance
| Forecaster | 2026 Price Forecast (per tonne) | Notes |
|---|---|---|
| AOCE (Australia's Office of the Chief Economist) | ~$17,500 | Prices ease from current levels; risks from Indonesia quota and sulphuric acid supply |
| BMI | $17,000 (revised up from $16,600) | Strong H1 performance, moderation expected in H2 |
The International Nickel Study Group (INSG) forecasts a relatively modest 32,000-tonne primary nickel deficit in 2026. “That leaves little room for additional Indonesian supply,” Manthey noted.
Conversely, BMI expects the nickel market to remain in surplus in 2026, but the excess is now set to narrow to 154,000 tonnes from an estimated 241,000 tonnes in 2025, as supply growth slows more sharply than demand growth. BMI forecasts refined nickel production to increase by 1.9% over 2025, while consumption grows 4.5%.
Risks and Outlook
Key downside risks to current prices include any upward revision to Indonesia’s 2026 mining quota (with an announcement expected in July), as well as any improvement in sulphur and sulphuric acid supply shortages, according to AOCE in its Resource and Energy Quarterly. The AOCE also said that sustained growth in global refined nickel supply is expected to contain prices at around $17,000/tonne (in real terms) to 2031, though emerging supply risks could lead to tighter market balance and higher prices earlier.
BMI highlighted that “Indonesia will remain the key swing factor: additional ore quota approvals could support higher output in H2 2026, but policy uncertainty, higher ore procurement costs and sulphur-related risks to HPAL operations will limit the scope for a stronger supply response.”
Manthey of ING Think warned that if higher mining quotas result in greater downstream production, the projected deficit in nickel could quickly disappear. “For now, expectations around Indonesian policy remain a bigger driver of the market than physical supply changes,” she said.
As of July 7, nickel prices have averaged $17,862/tonne year-to-date, supported by expectations that stricter Indonesian policy would constrain ore availability and increase procurement costs. However, BMI notes that a persistent market surplus should keep nickel prices above 2025 levels of $15,161/tonne, marking a jump of 12.1%.
For commodity traders and procurement teams, the next key data point is Indonesia’s official announcement on the 2026 RKAB quota, expected in July 2026. The direction of prices in the coming months will largely reflect whether the government opts for supply restriction or loosening.
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