SunSirs: Bolstered by Policy Tightening and Raw Material Shortages, Nickel Prices May Fluctuate at Elevated Levels in June

Trend Analysis

According to nickel price monitoring by SunSirs, nickel prices experienced a slight decline in May. At the beginning of the month, the price stood at 150,683.33 RMB/ton; by the end of the month, it had edged down to 143,750 RMB/ton. The overall decline for the month was 4.6%, while the price showed a year-on-year increase of 17.39%.

Macroeconomic Outlook: In April, the U.S. CPI rose 3.8% year-on-year, while the PPI climbed 6%—both exceeding market expectations. Compounded by geopolitical tensions in the Middle East driving international oil prices above $110 per barrel, the yield on 10-year U.S. Treasury bonds briefly breached the 4.6% mark, and the U.S. Dollar Index approached the 100 threshold. Consequently, the non-ferrous metals sector as a whole came under pressure, and nickel prices experienced a significant correction amidst a sell-off triggered by systemic risks. As the month progressed, the market's reaction to the Middle East situation gradually subsided, yet its sensitivity to the Federal Reserve's monetary policy continued to heighten, making macroeconomic headwinds more pronounced. Nevertheless, supply risks regarding sulfur remained unresolved, and raw material costs stayed persistently high; consequently, after finding strong support near the 140,000 yuan/ton level, nickel prices shifted into a range-bound, oscillating pattern. Currently, the international macroeconomic environment is imposing a "floor below, ceiling above" dynamic, creating a two-way constraint on nickel prices.

Regarding raw materials: The supply landscape presents a distinct divergence, characterized by "scarcity in Indonesia and abundance in the Philippines." In Indonesia, the 2026 RKAB nickel ore mining quota has been drastically slashed from 379 million tons in 2025 to a range of 260–270 million tons—a reduction exceeding 30%. Given that smelters maintain a rigid demand for approximately 340–350 million tons of nickel ore, the supply-demand deficit continues to widen. Furthermore, operations at the Eramet Weda Bay nickel mine were suspended in May, contributing to firm and resilient ore prices. Concurrently, new HPM regulations—effective since mid-April—have significantly raised the adjustment coefficients for low-grade nickel ores and incorporated associated metals (such as cobalt and iron) into the tax base, thereby driving up raw material costs across the entire supply chain. In the Philippines, the onset of the dry season has led to a marked increase in both nickel ore production and shipments. CIF transaction prices for 1.3%-grade ore have held steady within the $48–50 per wet ton range; while ore prices remain stable, they exhibit a slight downward bias, offering a measure of temporary relief to domestic NPI production costs. Meanwhile, policy negotiations within Indonesia remain ongoing; the planned implementation—originally scheduled for June—of increased taxes on mining rights and ore exports has been postponed, signaling the government's efforts to strike a balance between tightening resource controls and safeguarding the operational interests of foreign investors.

Supply Side: From January to April 2026, refined nickel production rose by 15% year-on-year to 147,800 tonnes—setting a new historical record—though output subsequently declined in May due to the impact of sulfur shortages. In April, China's total supply of primary nickel stood at 212,100 nickel tonnes, representing a month-on-month decrease of 4.1% but a year-on-year increase of 13.4%; total imports amounted to 117,300 nickel tonnes, down 6.2% from the previous month. As of May 22, global visible inventories reached 393,000 tonnes—an increase of 13,715 tonnes compared to the end of the previous month. Within this total, LME inventories saw a slight increase to 279,000 tonnes, while inventories at the SHFE surged significantly to 84,621 tonnes, clearly indicating a trend of inventory accumulation within the domestic market.

Regarding demand: The stainless steel market is currently driven primarily by essential-need purchasing. While 300-series stainless steel mills maintain high production schedules, their profit margins are narrowing, and mills are showing an increased inclination to pressure nickel pig iron prices downward. In the new energy sector, the recovery of production schedules for ternary precursors has been relatively slow; most enterprises hold ample inventories of finished nickel sulfate, resulting in limited willingness to accept high-priced nickel salts. Domestic social inventories have accumulated to 114,453 tons, and the pressure to digest spot inventory remains undiminished. Furthermore, downstream consumption remains generally weak, the pace of terminal-user pickups has slowed, and the overall trading atmosphere in the market is subdued.

Imports and Exports: Regarding refined nickel, net imports of electrolytic nickel in April totaled 34,448 tons—an exceptionally high volume. A substantial surplus of production capacity, unable to be diverted abroad due to the closure of export windows, has remained stranded within the domestic market; this stands as one of the primary reasons behind the persistent accumulation of domestic inventories. Regarding nickel ore imports, China’s import volume saw a significant increase in April; data from the first quarter further indicates that supplies from the Philippines are playing an increasingly vital role.

Influencing Factors

The most critical influencing factors stem from a multi-pronged policy offensive by Indonesia: drastic cuts to RKAB quotas, upward adjustments to HPM benchmark prices, tightened regulations on foreign exchange retention, and intensified tax audits. Collectively, these measures have driven up the industry-wide cost base and prompted Chinese-funded enterprises to send formal letters to the Indonesian government, lodging complaints regarding the lack of stability and continuity in its policies. Meanwhile, a sulfur supply crisis—triggered by the closure of the Strait of Hormuz—has impacted Mixed Hydroxide Precipitate (MHP) production, emerging as another major variable on the cost front. A divergence in domestic and international inventory levels constitutes another key characteristic: while overseas LME inventories have been depleted, domestic stockpiles have continued to accumulate, signaling a reversal in trade flows. Furthermore, on May 20, Indonesia officially established a specialized agency for natural resource exports, designating state-owned enterprises as the exclusive exporters of strategic resources such as ferroalloys and coal; widespread market concern that nickel raw materials will subsequently be brought under this regulatory umbrella has further reinforced expectations of tightening supply. Finally, with downstream demand from the stainless steel and new energy sectors remaining tepid—and thus failing to provide the necessary momentum for an upward breakout—these factors collectively underpin the current "stuck-in-the-middle" trading pattern observed in nickel prices. 

In summary: On the supply side, key attention must be paid to the implementation of Indonesia's mid-year RKAB supplementary quotas. Should there be no significant increase in these quotas, the prevailing tightness in ore supply will continue to provide a floor of support for nickel prices; conversely, if quotas are relaxed, the premiums built up in the preceding period may face further erosion. Supply risks regarding sulfur have not yet dissipated; the status of shipping traffic through the Strait of Hormuz remains a critical variable influencing costs within the hydrometallurgical production chain. Although expectations for shipping resumption have recently risen, the actual timeline for a return to normalcy remains unclear. On the demand side, downstream nickel sectors began entering their seasonal off-peak period in June. With the exception of continued robust demand from the ternary battery sector, consumption momentum in areas such as stainless steel is trending downward, rendering these sectors unlikely to provide upward price drivers. On the macro level, market participants must closely monitor developments in the U.S. Federal Reserve's monetary policy as well as the evolving geopolitical landscape in the Middle East. Significant uncertainty persists regarding Indonesia's industrial policies; potential changes—such as adjustments to the scope of export controls or tax regulations—could trigger volatility in market sentiment. Taken together, nickel prices in June 2026 are expected to continue exhibiting a pattern of high-level volatility, driven by the interplay between cost-based support on the supply side and downward pressure stemming from weak demand.

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