Nickel Price Jumps as Indonesia’s Top Mine Cuts Output
•February 11, 2026
0
Companies Mentioned
Why It Matters
The tighter nickel supply supports price recovery, benefiting Indonesian revenues and downstream manufacturers, while the concurrent coal cuts underscore Jakarta’s pivot toward greener, higher‑margin commodities.
Key Takeaways
- •Indonesia cuts Weda Bay nickel quota to 12Mt.
- •LME nickel up 2% to $17,835/tonne.
- •Global nickel surplus shrinks; price rally >20% since Dec.
- •Battery demand softens, prompting shift to non‑nickel chemistries.
- •Coal output quotas also reduced by ~25% in Indonesia.
Pulse Analysis
Indonesia dominates the nickel market, accounting for roughly two‑thirds of global supply. The government controls output through annual mining permits (RKABs) and can adjust quotas mid‑year to manage surplus. This week it announced a sharp reduction for PT Weda Bay Nickel, slashing the ore allocation from 42 million tonnes in 2025 to just 12 million tonnes for 2024. The move reflects Jakarta’s broader strategy to tighten supply, protect domestic revenues, and avoid the price collapse that followed the 2022‑2023 production boom, and to align with its long‑term industrial policy.
The cut sent LME nickel 2 percent higher to $17,835 a tonne, extending a rally that has added more than 20 percent since mid‑December. Traders attribute the surge to tighter Indonesian quotas, which have erased a sizable portion of the previously reported surplus. At the same time, demand from the electric‑vehicle sector remains softer than expected as manufacturers experiment with lithium‑iron‑phosphate and other non‑nickel chemistries. This divergence between supply constraints and muted battery demand creates a volatile pricing environment that investors watch closely, and could tighten profit margins for downstream smelters.
Beyond nickel, Jakarta is also curbing thermal‑coal output, trimming quotas by roughly 25 percent. The simultaneous reduction of two major commodities signals a shift toward higher‑value, low‑carbon exports and a desire to stabilize domestic markets. For global EV manufacturers, tighter nickel supplies may accelerate the search for alternative cathode materials or prompt earlier investments in Indonesian processing capacity. Meanwhile, coal buyers will need to diversify sources, potentially boosting competition among other exporters. Indonesia’s coordinated quota policy thus reshapes commodity flows and influences strategic decisions across the energy transition, and may affect pricing dynamics for downstream users.
Nickel price jumps as Indonesia’s top mine cuts output
Nickel prices rose for a fourth straight day Wednesday after Indonesia ordered the world’s largest nickel mine to sharply cut output in a move aimed at tightening global supply and lifting prices.
LME nickel climbed 2% to $17,835 a tonne as of 6:45 a.m. London time, after earlier touching $17,910, extending a rally of more than 20% since mid-December amid speculative buying and heightened geopolitical tensions.
Indonesia plans to issue production quotas of 260 million to 270 million tonnes of nickel ore this year, according to Bloomberg, slightly above an earlier estimate of 250 million to 260 million tonnes but far below the 379 million tonnes targeted for 2025. Authorities manage output through annual mining permits, known as RKABs, and can revise volumes mid-year.
PT Weda Bay Nickel will receive a 12 million tonne ore quota this year, down from 42 million tonnes in 2025. The mine, located on Halmahera in North Maluku, is owned by Tsingshan Holding Group Co, France’s Eramet SA and PT Aneka Tambang. Eramet confirmed the reduced quota and said it plans to seek a revision, while the county’s Energy and Mineral Resources Ministry said quotas remain under evaluation.
Price control
Indonesia is trying to rein in a persistent global surplus after its production surged to about 65% of world supply, triggering a two-year price slump that forced higher-cost rivals in Australia and New Caledonia to shut down.
The quota cut will weigh heavily on Weda Bay, which had planned to expand output to more than 60 million tonnes of ore to support a nearby industrial park. Instead, it has imported large volumes of ore from the Philippines to offset local shortages.
Nickel, used in stainless steel and electric-vehicle batteries, has seen weaker-than-expected demand from the battery sector as some manufacturers shift to non-nickel chemistries.
In January, Macquarie Group raised its 2026 nickel price forecast by 18% to $17,750 a tonne on the LME, citing a sharp drop in the expected surplus due to tighter Indonesian quotas.
Curbing coal
Indonesia is also curbing thermal coal output, with mining quotas in the world’s largest exporter set to fall by nearly 25% from a year earlier. The Indonesian Coal Mining Association said the cuts could force some operations to close and leave overseas buyers scrambling for alternative supplies.
(With files from Bloomberg)
0
Comments
Want to join the conversation?
Loading comments...