Highlights

  • LME cash nickel slipped 1.9% to US$15,875/t on 10 Nov but is 4.4% above its 3 Nov level after a one-day 4.1% jump on 5 Nov.
  • Jakarta signalled deeper 2027 RKAB ore-quota cuts, below the 290-300 million t 2026 level, citing a global surplus of about 800,000 t.
  • A binding Quota would tighten ore and lift costs, but 271,662 t of LME stocks and no final quota figure cap the rally for now.

Nickel dipped on Tuesday, but Indonesia's talk of deeper ore-quota cuts has already lifted it off a 10-month low and put a fresh floor under one of the market's most oversupplied metals.

What happened

Nickel gave back some ground on Tuesday but is still sitting on its best run in months. LME cash nickel settled at US$15,875 a tonne on 10 Nov, down 1.9% from US$16,190 the day before, while three-month metal settled at US$16,075.

Zoom out and the picture looks very different. Cash nickel is 4.4% above the US$15,200 it fetched on 3 Nov and well clear of the US$14,885 low printed on 15 Oct. The big jump came on 5 Nov, when cash leapt from US$15,465 to US$16,100 in one session, a gain of about 4.1%.

Nickel traded near US$16,350 on 5 Nov, its highest since September, and was quoted around US$16,180 early on 11 Nov. Stocks have barely moved: LME inventory stood at 271,662 tonnes on 10 Nov, about 2.4% below the 278,238 tonnes held on 30 Oct.

Why it happened

The trigger was Jakarta. On 2 Nov, Indonesian energy minister Bahlil Lahadalia signalled a further cut to the 2027 nickel ore quota set under the RKAB work-plan system, saying the Supply controls used for coal "should also be implemented in nickel". Nickel had just slipped to about US$15,800, roughly 5% under the government's own benchmark price.

Officials then added detail. A senior ministry official said 2027 allocations would reflect the optimal operating capacity of domestic smelters rather than their raw-material appetite, and cited a global surplus of about 800,000 tonnes. Director general Tri Winarno said the 2027 quota would fall below the revised 2026 level of 290-300 million tonnes, even though miners have asked for more than 500 million.

Bahlil was blunt about the logic: "If the Commodity is not expensive today and prices are not good, leave it in the ground". Add reports that Chinese-backed giants Huayou and Tsingshan are weighing capacity cuts of up to 50%, and short sellers had good reason to cover.

Tuesday's dip came without a fresh headline. The likeliest reading is a pause after a sharp run, with traders waiting for an actual number rather than more signals. Jakarta has still not published the 2027 allocation.

How it plays out

The supply mechanics are simple. Indonesia is the world's largest nickel producer, so every tonne of ore it declines to permit is a tonne that never reaches a pig iron furnace or a battery-chemicals plant. Tighter ore would raise costs for Indonesian smelters and could finally slow the flood of metal that dragged prices to near a 10-month low in October.

But the overhang is real. LME stocks above 270,000 tonnes are a hefty buffer, and China held another 124,400 tonnes in social inventory on 30 Oct. Surplus estimates also vary wildly: Indonesian officials cite around 800,000 tonnes, while an international industry study group forecasts just 19,000 tonnes for 2026 and 70,000 tonnes for 2027.

If the quota bites, the winners are higher-cost miners outside Indonesia, whose margins have been crushed, and Indonesian ore sellers who gain pricing power. The losers are stainless steel mills and battery makers that have enjoyed cheap feedstock, and smelter operators left running below capacity.

Next week, watch for a concrete 2027 RKAB figure from the energy ministry, confirmation of the Huayou and Tsingshan cuts, and whether LME stocks start falling faster. Rallies built on rhetoric can fade: in January, three-month nickel fell as much as 4.4% in a session when Jakarta held back quota details.