News and Articles

• LME nickel slipped to about 16,570 dollars per tonne on September 1, a multi week low
• Prices rebounded toward 16,900 dollars per tonne on September 3 on Indonesia water risk
• Indonesia Morowali Industrial Park warned of 30 to 40 percent output cuts if water scarcity persists
• Chinese HPAL operators considered coordinated 30 percent output cuts to shore up margins
• LME on warrant nickel stocks stood at about 268,314 tonnes at the end of August

Global nickel markets moved through a volatile first week of September 2026, with the London Metal Exchange three month contract pulling back to a multi week low before rebounding on fresh concerns about supply from Indonesia. The three month contract slipped to about 16,570 dollars per tonne on September 1 and eased further to about 16,680 dollars on September 2, with traders citing ample near term availability and elevated LME warehouse stocks as the main reasons for the softness. By September 3 the market found a floor and recovered toward 16,900 dollars per tonne after news that water scarcity in Indonesia was threatening a large slice of local processing capacity.

The immediate supply trigger came from the Indonesia Morowali Industrial Park on Sulawesi, one of the two large integrated nickel processing hubs in the country. Operators warned that a strong El Nino pattern had reduced water availability at the site to the point where output cuts of 30 to 40 percent could not be ruled out if alternative water sources are not secured. Indonesia accounts for more than half of global nickel output, and most refined ferronickel, nickel pig iron, and mixed hydroxide product used by stainless steel and battery precursor makers passes through the Morowali and Weda Bay parks.

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The broader supply picture stayed mixed. Chinese nickel producers were reported to be considering coordinated output cuts of about 30 percent at high pressure acid leach plants to shore up margins, while Indonesia has already lowered its 2026 mining quota to between 260 and 270 million tonnes of ore, down from 379 million tonnes in 2025. Philippine ore imports into Indonesia continued to fill some of the gap, running above 11 million tonnes in the first seven months of 2026 as domestic mines struggled with permit and quality issues.

Downstream demand was uneven. Stainless steel mills in China and Indonesia kept operating rates firm on healthy order books, while the electric vehicle battery precursor segment saw slower growth in the third quarter as several Chinese makers rebalanced cathode chemistry away from higher nickel content grades toward LFP. LME on warrant stocks stood at about 268,314 tonnes at the end of August, keeping physical availability more than adequate for near term needs.

For procurement teams, the near term action is to keep coverage on rolling contracts rather than chasing the recent rebound. Stainless steel mills should confirm October ferronickel and NPI supply from Indonesia and Philippine suppliers before any El Nino related capacity cut is confirmed. Battery precursor buyers should watch Chinese HPAL output signals, as any coordinated cut would tighten class one nickel and MHP availability quickly. Trading houses may find room to arbitrage between weaker Shanghai stocks and firmer landed cargoes in Europe if Indonesia water risk keeps escalating.