The nickel market has entered a new phase characterized by tightening supply conditions and deliberate price management by Indonesian authorities. After breaking through the trading range of 17,000 to 18,000 dollars per ton that prevailed over recent weeks, prices rose to approximately 19,200 dollars per ton, settling within the target range of 18,500 to 20,000 dollars. Prices also touched the 19,600 dollar level during a recent session, signaling improved market fundamentals across the supply chain.

This price movement is not viewed as a mere cyclical fluctuation. Mark Selby, CEO of Canada Nickel, believes the market is witnessing the "beginning of a new normal" rather than a temporary squeeze. He noted that structural changes imposed by Indonesia—the world's largest nickel producer—have reshaped the cost curve and supply dynamics, supporting the sustainability of elevated prices over the long term.

In this context, the Indonesian quota system has emerged as a key factor in reducing near-term supply. This follows Eramet’s decision to suspend operations at the "Weda Bay" mine after exhausting its annual ore quota of 12 million tons. This mine is a primary supplier to industrial production complexes in Indonesia, highlighting the effectiveness of the quota system in balancing the market.

Indonesia has adopted several strategic measures to manage the market, most notably shifting from three-year production quotas to annual quotas, granting greater flexibility to increase or decrease supply according to market conditions. This system appears carefully designed to support price increases without causing sharp volatility that could disrupt the market or incentivize the entry of competing supplies.

The Indonesian approach is not limited to physical supply control but also extends to indirect influence on prices. Selby indicated that authorities might resort to "moral suasion" if prices rise too quickly above the 20,000 dollar per ton level, by hinting at possible supply increases or warning against excessive price levels. It is believed that the target range between 20,000 and 21,000 dollars achieves a balance between generating lucrative profits for Indonesian producers and preventing the stimulation of new high-cost production projects in other regions.

At the same time, high input costs are supporting prices, particularly sulfur, which has risen by more than 100 dollars per ton to exceed 1,000 dollars, compared to approximately 150 dollars 18 months ago. For producers utilizing High-Pressure Acid Leaching (HPAL) technology, every 100 dollar increase in the price of sulfur raises the cost of nickel production by about 1,000 to 1,200 dollars per ton, reinforcing inflationary pressures in the market.

The sulfur market also faces additional risks due to the closure of the Strait of Hormuz, which represents about 25% of global supplies and 75% of Indonesia's imports. If the closure persists longer, it could lead to a significant decline in HPAL production, pushing nickel prices up by thousands of additional dollars per ton.

On another front, nickel inventories on the London Metal Exchange (LME) continue to decline, falling by about 4,000 tons this month following a 6,000-ton drop the previous month. This indicates that the market is approaching balance after a long period of surplus, with expectations of intensifying pressure as the year progresses.

This decline is occurring despite the fact that about 80% of global nickel production—particularly Nickel Pig Iron (NPI) and Mixed Hydroxide Precipitate (MHP)—is not delivered through the LME. However, the expansion of refining capacities in China and Indonesia has helped integrate these products into the global market.

On the demand side, stainless steel prices rose by 4% to 5% during the week, which is expected to trigger a restocking cycle across the supply chain. Since nickel is a primary component in the production cost of this type of steel, rising prices prompt buyers to increase inventories in anticipation of further hikes.

Although nickel prices have risen from approximately 14,000 dollars per ton in December to current levels, profit margins have only recently begun to recover due to high ore and intermediate product costs. This supports the sustainability of high prices rather than indicating a temporary speculative bubble.

Bitcoin (BTC) recorded a slight recovery on Wednesday, trading above the 77,000 dollar level after retreating by approximately 3% over the previous two days. At the same time, institutional demand saw some cooling, as spot Bitcoin ETFs recorded modest outflows on Tuesday for the second consecutive day. Traders are now awaiting the Federal Reserve's interest rate decision, which could play a decisive role in determining the next direction for the world's largest cryptocurrency.

Bitcoin saw a minor bounce during the European trading session as investors hesitated, waiting for the anticipated monetary policy decision. Focus is particularly centered on the post-meeting press conference, where outgoing Fed Chair Jerome Powell's statements will be analyzed for signals regarding the future path of monetary policy. These expectations will have a direct impact on U.S. dollar movements and, consequently, on high-risk assets like Bitcoin.

Analysts at Bitfinex noted that the mechanism of influence is clear: interest rates affect yields and the dollar index, which in turn affect ETF flows and exchange reserves, ultimately reflecting on Bitcoin's price. They explained that a "hawkish hold" (keeping rates steady with a firm tone) could keep institutional demand weak and might push the price to decline or remain below the 72,100 dollar level. However, if the decision comes with a "dovish" tone—signaling slowing growth or the possibility of future rate cuts—it could support investment flows and drive the price toward the 80,000 to 84,000 dollar range.

In contrast, geopolitical factors continue to weigh on the market, as uncertainty surrounding the second round of peace talks between the United States and Iran has limited risk appetite. Hopes faded after Donald Trump canceled a scheduled visit by his special envoy, alongside reports indicating his dissatisfaction with the Iranian proposal to end the war and reopen the Strait of Hormuz.

On the other hand, data from SoSoValue showed that Bitcoin ETFs recorded outflows of 89.68 million dollars on Tuesday, following a withdrawal of 263.18 million dollars on Monday. This ended a nine-day streak of positive inflows that began in mid-April. The continuation of this trend is a warning signal that could lead to further price correction.

Technically, Bitcoin maintains a moderately positive outlook as it trades above its 50-day and 100-day moving averages, providing significant support near the 73,600 and 75,600 dollar levels. The Relative Strength Index (RSI) indicates moderate positive momentum, although other indicators show a slowdown in the ascent as the price approaches strong resistance levels.

Overall, it appears that Bitcoin's near-term movements will remain hostage to the Fed's decision and policy tone, alongside developments in the geopolitical landscape, leaving the market in a state of cautious anticipation before the next trend is established.

Oil prices rose by 3% on Wednesday, with Brent crude reaching a one-week high amid media reports that the United States will extend its blockade of Iranian ports. This development suggests prolonged supply disruptions from the Middle East, a region vital to global energy production.

The Wall Street Journal reported that President Donald Trump has instructed his aides to prepare for an extension of the blockade on Iran, citing U.S. officials. According to the report, Trump aims to maintain pressure on the Iranian economy and its oil exports by preventing shipping traffic to and from its ports. Despite a ceasefire being reached in the conflict involving the United States, Israel, and Iran, the situation remains in a state of deadlock as both sides seek a formal end to hostilities.

Brent crude futures for June delivery rose by 3.33 dollars, or 3%, to 114.59 dollars per barrel by 10:04 GMT, marking the eighth consecutive day of gains and the highest level since March 31. The June contract expires on Thursday, while the more actively traded July contract reached 107.43 dollars, an increase of 2.9%.

U.S. West Texas Intermediate (WTI) crude for June delivery climbed 3.55 dollars, or 3.6%, to 103.48 dollars per barrel—its highest level since April 13—recording gains in seven out of the last eight sessions.

Yang An, an analyst at Haitong Futures, noted: "The recent surge in oil prices is driven by the closure of the Strait. If Trump decides to extend the blockade, supply disruptions will worsen, pushing prices even higher."

In a related development, the Abu Dhabi National Oil Company (ADNOC) informed some customers of the possibility of loading two types of crude oil from outside the Gulf next month as the closure of the Strait of Hormuz persists, according to sources and documents seen by Reuters.

Investors are also assessing the implications of the United Arab Emirates' surprise decision to withdraw from the OPEC+ alliance. However, analysts do not expect a significant short-term impact. A memo from ANZ Bank stated: "The UAE's withdrawal underscores weakening organizational cohesion, but the immediate effect is limited. Geopolitical factors, inventories, and logistics remain the primary drivers of prices rather than institutional changes."

ING analysts added that any increase in UAE production would only have a practical effect once a resolution allows energy to pass through the Strait of Hormuz without restrictions. They noted that in the medium to long term, the UAE's decision implies higher market supply, which could further push the Brent forward curve into backwardation.

Meanwhile, market participants are awaiting data from the U.S. Energy Information Administration (EIA) on inventories, following an American Petroleum Institute (API) report showing a decline in crude stocks for the second consecutive week.

The U.S. dollar rose slightly on Wednesday as investors awaited the Federal Reserve's interest rate decision, which is expected to be Jerome Powell's last in his role as Chair. Meanwhile, the war with Iran continues without clear signs of a near-term resolution.

Market activity was relatively thin due to a public holiday in Japan and general caution ahead of several central bank decisions over the next 48 hours. Investors are also bracing for major earnings reports from Amazon, Microsoft, and Meta, scheduled after Wednesday's closing bell.

The Euro fell 0.07% to 1.1705 dollars, while the British pound dropped 0.05% to 1.3513 dollars, both moving further away from their highs reached earlier this month. The Euro is currently trading approximately 1% below its level at the end of February when the war broke out, while the pound has remained largely unchanged.

The Federal Reserve's decision will dominate the headlines later today. While a rate hold is widely anticipated, markets are focused on how policymakers assess the war's impact on the economy and the future of Jerome Powell within the central bank.

Carol Kong, a currency analyst at Commonwealth Bank of Australia, noted: "The question is what Powell will do, as he remains a member of the Board of Governors until 2028. Will he resign after his term as Chair ends, or will he stay on and play a role similar to a 'shadow chair'?" She added that Powell previously indicated he would stay if he felt the Fed's independence was threatened, meaning his decision will likely depend on his assessment of that situation.

On the geopolitical front, efforts to end the war with Iran have reached an impasse. President Donald Trump expressed dissatisfaction with Tehran's latest proposal, demanding that the nuclear file be addressed from the outset.

Oil prices rose for the eighth consecutive day, marking the longest winning streak since May 2022 following the Russian invasion of Ukraine. The June contract—expiring Wednesday—rose 1% to 112 dollars per barrel, while the more active July contract recorded 105 dollars. This surge has dampened market confidence and supported safe-haven demand for the dollar.

Derek Halpenny, head of global markets research at MUFG, said: "With oil trading back above 110 dollars, the risk of more severe economic consequences during the summer is increasing." He added that Europe and Asia would be the most affected, and if the situation persists, the Euro and Asian currencies could face further downward pressure.

### Yen Under Pressure and Intervention Watch

The Japanese yen stabilized just below the 160 level against the dollar, despite hints from the Bank of Japan following its recent meeting that a rate hike is strongly possible in the coming months.

The yen was last at 159.63 per dollar, unchanged on the day but having lost about 0.6% this month and over 2% since the war began, largely due to Japan's heavy reliance on energy imports. Governor Kazuo Ueda confirmed the bank's readiness to raise rates to prevent energy price shocks from spilling into general inflation, provided the economic slowdown from the Middle East crisis remains limited.

Christopher Wong, a strategist at OCBC, commented: "There is a hawkish tone; the bank might have raised rates already if not for the war, but any future increases will likely be gradual." He added that the yen faces a floor near levels that might trigger official intervention, making a strong rally difficult to foresee currently.

Weekly data shows that investors are holding their largest short positions on the yen since late July 2024—shortly after the last government intervention when the exchange rate crossed 161 yen per dollar. Traders remain on high alert for potential support from Japanese authorities, with 160 yen per dollar viewed as a critical threshold.

Elsewhere, the Australian dollar fell 0.26% to 0.7164 dollars following local inflation data that showed persistent price pressures, even though the core trimmed-mean inflation index came in slightly lower than expected.