The current oversupply pattern in the market has not changed, and it is difficult for nickel prices to see a trend of upward movement. If the Indonesian government issues new policies after the National Day holiday to further disrupt the market, it may bring about a period of opportunity for a rise.

In late September, changes in Indonesian policy brought some disruptions to the global nickel market. Although the actual supply was not significantly affected, it significantly increased market concerns about medium- to long-term supply uncertainties, which formed a certain support for the nickel price, which is at a low level. The current pattern of market oversupply has not changed, and it is difficult for the nickel price to show a trend of upward movement. If the Indonesian government issues new policies after the National Day holiday, which further disrupt the market, it may bring a period of upward opportunity.

LME nickel prices maintain strength

During the National Day holiday, the LME nickel price showed an overall trend of fluctuating upward, with the closing price on October 7th rising by about 1.48% compared to September 30th. On the macro level, the expectation of further interest rate cuts by the Fed has been further strengthened, and the market expects there is still room for 50 basis points of rate cuts this year. Due to the clear expectation of the Fed's balance sheet reduction, the expectation of loose liquidity in the offshore US dollar market has been mobilized, and combined with the continuous rise in the current gold and silver prices, the prices of non-ferrous metals priced in US dollars rose across the board during the holiday. The LME nickel price also broke away from the downward trend. However, due to factors such as high inventory, limited impact of changes in Indonesia's nickel mine policy, and other factors, the Shanghai nickel price declined at the end of September, and there is a certain expectation of catch-up appreciation after the National Day holiday.

Indonesian policies frequently change

Based on the current public data of RKAB approval in Indonesia, the total approved amount of 310 million wet tons has been approved by 2025, and the annual quota is relatively sufficient. Since the second quarter of this year, the premium of Indonesian domestic nickel ore has been maintained at a high level. As of the beginning of October, the premium of Indonesian domestic nickel ore has been maintained at 24-27 US dollars/wet ton. According to Mysteel data, the total import of Philippine nickel ore in Indonesia from January to July 2025 was 7.152 million wet tons, an increase of 51.2% year-on-year. In the short term, Indonesia's nickel ore supply gap still exists.

Since the end of August, Indonesia's policies have been frequently changed, superimposed with the implementation of the new regulations of the upcoming work plan and budget (RKAB), it is not impossible that the Indonesian government will tighten its policies again in the fourth quarter, such as export controls, increasing resource tax rates, shortening the approval period of RKAB, etc., thus lifting the price center of the nickel industry chain.

Revoke the mining leases of Kabae and Gbe islands

On August 22nd, according to SMM, due to ecological and environmental concerns and the strong opposition of the local people, the Indonesian Ministry of Environment has officially revoked the nickel mining permit of Kabaeena Island. At the same time, the Indonesian Ministry of Environment has also revoked the mining permit of Gebe Island. The Indonesian Ministry of Environment stated that although Indonesian law still allows for limited mining activities on small islands, such activities will change the natural landscape. The purpose of revoking the mining permits of the two small islands is to restrict mining activities on islands with an area of about 200,000 square meters, and a more comprehensive environmental assessment will be conducted in the future to strengthen supervision and ensure the safety of the ecosystem.

The above move by the Indonesian Ministry of Environment is similar to the previous move to suspend mining permit approval for four islands in the Raja Ampat archipelago, the Indonesian government had revoked the mining business license (IUP) of four nickel mining companies in Raja Ampat Island, West Papua province in June this year, on the grounds of protecting the surrounding environment from the destruction of mining operations.

RKAB approval period shortened to one year

On August 26th, according to Mysteel, the Ministry of Energy and Mineral Resources of Indonesia (ESDM) announced that starting from 2026, the approval period for RKAB would be changed from the current three years to one year. The relevant revision work is expected to be completed in the early part of September 2025, and mining companies can submit annual RKAB applications from the end of September 2025.

The current approval period for RKAB in Indonesia is three years, allowing mining companies to make long-term mining development plans after the approval is granted. Shortening the RKAB approval period from three years to one may prevent mining companies from obtaining the necessary approval if they carry out production and operation activities according to long-term plans.

Suspended mining activities of 190 enterprises for 60 days

On September 23, ESDM imposed administrative sanctions on 190 mining companies, suspending their mining activities. Among these 190 companies, 39 are nickel mining companies, distributed in North Maluku (3), South Sulawesi (2), Central Sulawesi (14), and Southeast Sulawesi (20). The reason for ESDM to take this measure is that these companies have not paid the mine restoration guarantee as required.

The 39 nickel mine enterprises that have accepted administrative sanctions have a relatively small production quota, and it is expected that the affected nickel mine shipments will only be a few million wet tons. Considering that Indonesia's mineable quota for 2025 is 360 million wet tons, this administrative sanctions will have little impact on Indonesia's nickel mine supply. As long as the mine enterprises pay the relevant fees on time and implement the reclamation plan, production can be restored.

Outlook for the later market

To sum up, the frequent changes in Indonesia's policies cannot change the existing pattern of nickel mine supply, but the implementation of the new RKAB regulations is highly likely to lead to an increase in the production costs of mining companies. Domestically, the key meeting window period will begin in mid-October, and the market will start a new round of policy expectation games in advance. Considering that nickel prices are more sensitive to Indonesia's policy disruptions in a low-valuation state, if policy disruptions and macro emotions resonate, there is a phased opportunity for the price of Shanghai nickel to rise.

As an integrated internet platform providing benchmark prices; On October 13th, the benchmark price of nickel by SunSirs was 123,916.67 RMB per ton, an increase of 1.16% compared with the beginning of this month (122,500.00 RMB per ton).

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