FX.co ★ Nickel Plunges Further

Nickel futures in the UK have declined to $17,000 per tonne, continuing the downturn from the 19-month peak of $19,000 reached in January. This movement is in sync with the broader retreat in other base metals, as investors reassess their speculative positions in these commodities. Despite this drop, the contracts remain significantly higher than last year's average, due largely to concerns about reduced supply. The government in Jakarta has announced it will reduce mining permits to 260 million wet tons of tin ore this year, down from 379 million tons the previous year, effectively removing a substantial portion of global supply. This is occurring even as demand for electrification and data centers rises in major economies. However, the uncertainty surrounding production due to limits on wet tons introduces some flexibility for miners, while insufficient reporting on production levels from major producers in Indonesia complicates the supply outlook. This situation persists notwithstanding Indonesia's efforts to clamp down on illegal mining activities.