Nickel Extends Gains on Indonesia Supply Cut

Nickel traded around $16,400 per tonne, extending gains as concerns over supply disruptions in Indonesia emerged. Smelters at the Morowali Industrial Park will cut nickel pig iron production due to an El Niño-driven water shortage, with the affected output potentially reaching around 100,000 tonnes, raising concerns over tighter supply and helping limit further downside. However, the near-term outlook remained constrained by weak Chinese downstream demand, with nickel salt procurement and spot stockpiling subdued while some precursor producers reduced operating rates. Additionally, Indonesia’s revised nickel ore benchmark price formula sharply lowered the HPM for low-grade 1.2% nickel ore to around $24.89 per wet tonne, nearly halving the previous level, which could reduce feedstock costs for HPAL plants and encourage greater use of low-grade reserves. High inventories across the nickel supply chain also pointed to ongoing destocking, limiting the scope for a sustained recovery.