Nickel rose 3.44% to $16,322 a tonne in three-month trading on the London Metal Exchange Thursday after Indonesia signaled a deeper cut to its 2027 ore quota, rebounding from near a 10-month low as the world’s largest producer moves to drain a global surplus.
Bahlil Lahadalia, a coordinating minister who also oversees mining and energy, said Monday that Indonesia is signaling a further cut to the 2027 quota. He said nickel had slid to about $15,800 a tonne, roughly 5% under the state’s reference price, and urged producers not to add capacity. The National Economic Council has since backed using the quota system to cut production, and Shanghai nickel jumped nearly 5% Thursday morning to 122,250 yuan a tonne. A weaker dollar, falling oil prices and a rebound in equities after the US midterm elections also lifted metals.
Tri Winarno, the ministry’s director general of minerals and coal, said the 2027 quota will fall below the revised 2026 level of 290 million to 300 million tonnes, which is up from 260 million to 270 million tonnes at the start of the year. Miners have requested more than 500 million tonnes for 2027, well above this year’s revised quota. London Metal Exchange stocks stand at 275,592 tonnes in the exchange’s latest data, with 14,508 tonnes earmarked for withdrawal.
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Related: Indonesia Orders Largest Nickel Mine to Slash Ore Output
Chinese-backed smelters in Indonesia have weighed deep cuts, including halving output of mixed hydroxide precipitate, an intermediate used to make electric-vehicle battery materials, and trimming nickel pig iron output by about 20%. Producers have confirmed neither the volumes nor the timing of any reductions. Justin Werner, who runs Nickel Industries, expects producers at the Morowali industrial park in Central Sulawesi to coordinate any reductions.
The rally still faces heavy stocks. Shanghai Metals Market said high inventories and weak spot buying could limit how long the rebound lasts, and China’s social stockpile of refined nickel stood at 124,400 tonnes on October 30. Indonesian officials have cited a global surplus of about 800,000 tonnes, while the International Nickel Study Group forecasts a much smaller surplus of 19,000 tonnes this year and 70,000 tonnes in 2027.
