Although the recent Shanghai nickel futures price has staged a strong bottom rebound under the dual impact of Indonesia's quota reduction and the taxation on associated products, the uncertainty surrounding Indonesia's nickel ore quota reduction is relatively high, and the impact of the taxation policy on associated products such as cobalt is relatively limited.
Recently, affected by the expected policies of Indonesia's RKAB quota reduction and the taxation on associated cobalt ores, the price of the main Shanghai nickel futures contract has rebounded rapidly from the bottom, showing an obvious V-shaped reversal in technical form, with the highest price reaching 130,880 yuan/ton, breaking through the upper edge of the previous shock range. Driven by policy expectations and sentiment, the long-short game has intensified.
The Indonesian Ministry of Energy and Mineral Resources plans to set the 2026 RKAB quota at 250 million tons, a significant 34% decrease from 379 million tons in 2025. Medy, Secretary-General of the Indonesian Nickel Miners Association, explained that this move aims to "prevent a further decline in nickel prices," revealing an obvious intention to support the bottom line of nickel prices. Relevant data shows that in 2025 (with December being an estimated figure), various secondary nickel products in Indonesia consumed a total of 303 million wet tons of pyrometallurgical and hydrometallurgical nickel ore. Considering changes in the actual mining efficiency of nickel ore, furnace feed grade, and recovery rate, to meet the raw material demand of existing smelting capacity, it is estimated that the demand for nickel ore in Indonesia in 2026 will be at least 327 million wet tons. Data from the Indonesian Statistics Bureau shows that from January to October 2025, nickel ore imports were 0.12 trillion wet tons, and it is expected that the full-year imports will exceed 15 million wet tons. Extrapolating linearly, the supplementary amount of nickel ore imports in 2026 will be 20 million wet tons. Assuming the 250 million tons quota is implemented in the future market, from the perspective of supply and demand balance, there will be a supply gap of 57 million tons of nickel ore next year.
Looking back at 2024-2025, the Indonesian government has repeatedly reversed its decisions on RKAB quota approvals. Especially regarding the approval volume of RKAB, it has always been characterized by "strict planning but loose implementation", with the actual issuance volume often significantly exceeding the initial plan. For example, at the beginning of 2025, the Indonesian government set the annual RKAB quota at 298 million tons and stated that it might further reduce it in the future, but the actual approved quota reached as high as 364 million tons. Therefore, we are more cautious about the actual implementation of this quota reduction, and it is expected that the final quota will be between 280 million and 320 million tons. However, before more disconfirming news emerges, the expectation of short-term supply shortages will continue to dominate the market, driving intensified capital games.
The Ministry of Energy and Mineral Resources of Indonesia plans to officially release the revised formula for the Nickel Reference Price (HPM) in January or February 2026. The core focus of this revision is to treat nickel's associated minerals (especially cobalt) as independent commodities and impose royalties on them. The Secretary-General of the Indonesian Nickel Miners Association revealed that if cobalt is calculated and classified as a secondary mineral, a royalty of 2% or 10% can be imposed. Considering that the price of cobalt is twice that of nickel, even if the associated cobalt content in nickel ore traded from 2023 to 2024 is only 0.1%, the Indonesian government can still increase its annual revenue by approximately 600 million US dollars. Based on the latest LME cobalt settlement price of 52,000 US dollars/ton, under the assumption of a 2% royalty, the cost per metal ton of nickel for nickel ore with a grade of 1.4% to 1.6% will increase by 65 to 74.28 US dollars; under the premise of a 10% royalty, the cost per metal ton of nickel for nickel ore with a grade of 1.4% to 1.6% will increase by 325 to 371.43 US dollars.
Despite the increase in costs, the actual net cost increase transmitted to the industrial chain is limited because the cobalt content is relatively low and integrated enterprises can still offset their gains through cobalt recycling. It is worth noting that, compared with the RKAB quota reduction, we believe that the probability of the implementation of the taxation policy on associated products is higher. From historical experience, the Indonesian government has been more resolute in implementing price policies such as revising HMA and levying PNBP in the first quarter than in quota approval. At the same time, considering that the grade of Indonesian nickel ore has been declining year by year, under the tendency of resource nationalism, the tax and price policy is more conducive to expanding the country's overall fiscal revenue than the quota reduction policy.
To sum up, although the recent Shanghai nickel futures price has staged a strong bottom rebound driven by the dual disturbances of Indonesia's quota reduction and the taxation on associated products, the uncertainty regarding Indonesia's nickel ore quota reduction is relatively high, and the impact of the taxation policy on associated products such as cobalt is relatively limited. According to forecasts from relevant institutions, Indonesia's MHP production capacity will reach 850,000 metal tons in 2026, with a year-on-year increase of more than 85%, and the output is expected to be 680,000 metal tons, a year-on-year increase of more than 45%. Against the backdrop of no significant growth in demand, the global nickel market surplus may further expand in 2026.
Based on the performance of the precious metals and non-ferrous metals sectors in this round, we believe that as an undervalued variety, Shanghai nickel has absorbed the spillover funds from within and outside the sector under the disturbance of news, and the short-term market trend is dominated by capital sentiment. In the later stage, without more policies being implemented, there is limited room for a further significant upward movement in Shanghai nickel futures prices.
