FX.co ★ Nickel Steadies Above 4-Year Low

Nickel futures remained stable at $15,500 per tonne, marking a recovery from the four-year low of $14,150 reached on April 8th. This improvement was largely driven by production restrictions in Indonesia, which countered fears of an excessively saturated market. The Indonesian government decided to reduce its nickel mining quotas by 120 million tons, setting the target at 150 million by 2025. This initiative is poised to decrease global supplies by 35% from current levels. The decision follows a wave of Chinese smelting projects in Indonesia after the country banned nickel ore exports in 2020. As of September, Indonesia had 44 operational nickel smelters, a significant increase from just four a decade ago. Nevertheless, the market's hesitation to initiate a significant recovery suggests that nickel might still face oversupply issues, as inventories at the London Metal Exchange (LME) warehouses are more than double compared to a year ago, standing at over 200 thousand tons. Concurrently, ongoing trade tensions between the US and China, along with uncertainty over the US administration's approach to negotiating trade agreements, have continued to dampen manufacturing activity.