Possible Nickel Cuts in Indonesia: Price Surge on the Horizon?

The Australian financial institution Macquarie recently warned that planned cuts in nickel production in Indonesia could threaten more than a third of the global supply. The Indonesian government's plans include reducing production quotas from 272 million tons in 2024 to possibly only 150 million tons this year, which could lead to a significant price increase in the markets. However, this drastic reduction of 40% compared to Macquarie's baseline forecast is considered unlikely. Nevertheless, concerns about a lower production level persist, which could potentially further reduce the existing slight supply surplus. Despite these challenges, Macquarie maintains the forecast that the market will show a small surplus this year. Nickel prices experienced a second consecutive annual loss in 2024, due to the Indonesian production boom and declining demand from the battery and stainless steel industries. Currently, traders are focusing on China's economic stimuli and the impact of the new tariff policy of the U.S. government. Crucial for the future development of nickel prices remains Indonesian production, which accounts for more than half of global nickel production. Last year, the mines struggled with the government's requirements, leading to a record import from the Philippines.