Nickel drops but still holds above $17,000 on global supply concerns

Nickel prices fell during trading on Friday amid ongoing concerns about disruptions to metal supplies across the Middle East due to the escalating war between the United States and Iran.

Nickel prices could rise further during the current year as the global market may shift into a supply deficit, following production restrictions imposed by Indonesia — the world’s largest producer — according to Macquarie Group.

The Indonesian government announced in December 2025 stricter quotas and tighter regulation of nickel supplies to address the global surplus and support prices that had been under pressure. Since then, nickel prices as well as related products such as nickel pig iron, nickel sulfate, and nickel ore have risen.

With global supply continuing to tighten, Macquarie strategists led by Jim Lennon expect nickel prices to continue rising amid higher prices for end products and increasing production costs. The bank noted that the rise in the local premium for nickel ore in Indonesia led to an increase of nearly $3,000 in nickel pig iron prices, which supported gains on the London Metal Exchange.

Bank analysts believe that nickel traded on the London Metal Exchange could find support between $17,000 and $18,000 per ton, a range close to the level at which the metal is currently trading.

Production decline risks

The Australian bank also indicated that nickel prices could rise further, as production may not increase this year due to Indonesian restrictions, which could push the global market into a supply deficit compared with previous expectations of a surplus of about 90,000 tons.

Japan’s Sumitomo Metal Mining had previously expected the global nickel surplus to reach 256,000 tons by 2026.

A shortage of limonite ore and the collapse of a mining tailings dam in Indonesia’s Morowali region also negatively affected production of MHP (Mixed Hydroxide Precipitate) extracted from laterite ores.

The bank added that any prolonged disruptions in sulfur supplies from the Middle East could also affect future production plans, along with the possibility of delays in some expansion projects for new production capacity.

During January and February, estimates indicate that nickel pig iron production fell about 10% year-on-year, partly due to lower ore quality and also because some furnaces were converted to produce nickel matte, which offers higher returns compared with NPI.

In trading, nickel spot contracts fell 2.1% to $17,100 per ton at 17:14 GMT.