Nickel falls after Indonesia clarifies new export rules and supply concerns ease

Nickel prices declined after Indonesia clarified that its new inspection rules for rare earth minerals will not delay nickel shipments when those minerals are produced only as byproducts, easing supply concerns. The move coincided with weaker-than-expected Chinese factory activity data, which added to worries about demand.

In trading, three-month nickel on the London Metal Exchange fell 1.56% to $16,980 per metric ton, while the most actively traded nickel contract on the Shanghai Futures Exchange dropped 1.91% to 129,520 yuan (about $19,179) per ton, underperforming the broader base metals complex.

The decline followed comments from Dudung Abdurachman, a senior official in Indonesia's presidential office, who said the new inspection requirements apply only when rare earth minerals are the primary product, not when they are produced as a byproduct of mining operations.

He added that authorities had allowed more than 100 delayed vessels to depart, while the state survey agency is preparing to issue 85 export reports that had previously been held up.

The new regulations had disrupted shipments of Nickel Pig Iron (NPI) and Mixed Hydroxide Precipitate (MHP), raising concerns over potential supply shortages. However, the Indonesian government's clarification led traders to conclude that the risk of a prolonged supply disruption had diminished, although some technical aspects of the new regulations remain unresolved.

At the same time, weak Chinese manufacturing data intensified concerns over demand from the world's largest consumer of industrial metals, adding further downward pressure on nickel prices.

Easing supply risk premium may weigh on prices in the near term

Regulatory disruptions that delay cargoes already prepared for shipment typically push nickel prices higher by creating a supply risk premium, as buyers are willing to pay more to secure prompt deliveries.

However, Indonesia's clarification, together with the release of delayed vessels and the approval of pending export reports, has eased fears of short-term supply shortages. That has been reflected in lower prices for nearby London Metal Exchange contracts.

Analysts said that any meaningful recovery in export flows would likely first appear through lower physical premiums in Asian markets, as well as a narrowing spread between nearby and longer-dated futures contracts. This helps explain nickel's weaker performance relative to other base metals during sessions dominated by developments surrounding Indonesian nickel exports.