FX.co ★ Nickel Surges to 1-Year High

Nickel futures in the UK have surged to $16,900 per tonne as of January, marking a significant 20% increase over the past three weeks and reaching their highest level in over a year due to recent global supply cuts. Indonesia, the leading global producer of nickel, has announced plans for a 34% reduction in nickel output in its 2026 budget. This decision aims to address concerns about oversupply and warnings from miners regarding the deterioration of ore grades. This move is the latest in a series of efforts to manage nickel oversupply since 2020 when Jakarta initiated a ban on ore exports, leading to sectoral overexpansion. Yet, despite these initiatives to curtail production, prolonged surpluses have caused benchmark futures to lag behind other base metals. Russia's Nornickel has even increased its surplus forecasts for the coming year to 275,000 tonnes. Moreover, stockpiles at the London Metal Exchange (LME) climbed by over 93,000 tonnes, reaching 255,000 tonnes last year. On the demand side, while global purchasing levels for stainless steel remained subdued, the increased use of nickel in electric vehicles provided some offset.