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Why nickel could shock as the metal to watch in 2026

• Nickel has been in the doldrums for the past few years due to Indonesia’s market dominance
• Recent news out of Indonesia has bolstered pricing over the past few weeks
• Explorers haven’t completely given up on nickel and are positioning for the next uptick

It’s been a brutal few years for the nickel sector with prices remaining depressed due to oversupply out of Indonesia.

Indonesia accounted for just 5% of global nickel output in 2015, rising to 49% in 2023 and sits at around 62% today due to heavy investment, particularly by the Chinese.

That’s led to persistent surpluses – around 200,000 tonnes in 2025 – which has suppressed pricing and wiped out almost all Australian production.

That’s a similar surplus to copper, but for a market that’s around a tenth of the size.

In November, Benchmark Mineral Intelligence estimated that at US$15,000 per tonne, more than a quarter of global supply, or roughly 926,000t, was operating at a loss.

That would rise to 40% at a price of US$14,500/t, a low seen in the past four weeks, and more than 50% at US$14,000/t.

While integrated Indonesian producers remain the lowest cost producers, domestic factors, including ore quota constraints, heavy rainfall, and declining saprolite grades, are starting to push Indonesian costs higher.

Relief on the way?

The Indonesian government has been tightening regulations on the mining sector in recent months.

In September, the government seized 148 hectares of ground from nickel producers due to forestry violations and suspended 190 mining operations, including 36 nickel mines, for failing to provide reclamation guarantees, though the market impact was limited.

Last month, Indonesia’s Ministry of Energy and Mineral Resources announced fines of up to 6.5 billion rupiah per hectare for violations of nickel mining business activities carried out in forest areas.

On December 17, the nickel price spiked on reports Indonesia would cap production at 250 million tonnes of nickel ore, down from 379Mt last year.

According to Reuters, Indonesian Energy and Mineral Resources Minister Bahlil Lahadalia last week confirmed the country would slash production to ensure “rational” prices.

“When the prices are good, businesses can reap better profit and the state can collect better royalties and taxes. This is what we are working on now,” he reportedly said on local television.

Last week, Vale’s Indonesian subsidiary said it had been forced to suspend some of its nickel production as it had not received approval for 2026 operations.

A report on Tuesday suggested Indonesian nickel miners could produce at 25% of proposed 2026 output while waiting for permit applications to be assessed.

The nickel price surged more than 10% on Tuesday to US$18,785/t, the highest price since September 2024.

Source: Stockhead​​​​​​​