Nickel Market Could Turn Deficit Due to Indonesia Quota, Says Macquarie – by Staff (Mining.com – March 11, 2026)

Key Takeaways

• Indonesia caps new nickel production starts
• Supply deficit could emerge in 2026
• Nickel prices rise on tighter global balance
• NPI premiums jump nearly $3,000 per tonne
• Downstream demand from EV batteries fuels price pressure

Summary

Macquarie Group warns that Indonesia's new nickel production quota could push the global market into a deficit this year. The December 2025 policy tightens supply to counter a glut, already lifting prices of nickel metal, nickel pig iron, nickel sulfate and ore. Macquarie strategists expect further price upside as downstream demand, especially for electric‑vehicle batteries, intensifies. A near $3,000 premium on Indonesian nickel pig iron underscores the market’s tightening dynamics.

Pulse Analysis

Indonesia’s decision to limit fresh nickel production marks a strategic shift from volume‑driven growth to price stabilization. By imposing stricter quotas, the government aims to curb the oversupply that has depressed nickel prices for years. This policy change reverberates through the global market, where Indonesia accounts for roughly a third of total output. The immediate effect is a sharp price rally across the nickel value chain, from raw ore to refined nickel pig iron, signaling tighter fundamentals for the commodity.

The price surge is not merely a short‑term reaction; it reflects deeper structural forces. Electric‑vehicle (EV) manufacturers and battery producers are scaling up demand for high‑purity nickel sulfate, a critical component for next‑generation batteries. As downstream demand outpaces the constrained supply, premiums on Indonesian nickel pig iron have jumped close to $3,000 per tonne, pushing the London Metal Exchange nickel price higher. Analysts at Macquarie project that this upward pressure will persist, especially if other major producers cannot quickly fill the gap left by Indonesia’s reduced output.

For investors and industry players, the emerging deficit presents both risks and opportunities. Companies reliant on nickel inputs may face higher input costs, squeezing margins unless they secure long‑term contracts or diversify sourcing. Conversely, miners with low‑cost operations stand to benefit from price appreciation, attracting capital to expand capacity or develop new projects. The policy also underscores the geopolitical importance of Indonesia in the battery supply chain, prompting stakeholders to monitor regulatory developments closely as the market navigates this new supply‑demand equilibrium.