FX.co ★ Nickel Bounces after Testing 4-Year Low

Nickel futures in the United Kingdom recently rebounded to $14,800 per tonne after hitting a four-year low of $14,455 on November 20th. This increase comes as the market reevaluates the extent of current oversupply conditions. In an effort to address the surplus, the Indonesian government has introduced new regulations, stipulating that permits for nickel refining will only be granted to facilities producing intermediate products. This move is part of a broader strategy to manage the over-saturation that began in 2020, following Jakarta's ban on ore exports. Subsequently, Indonesia reduced its nickel mining quotas by 120 million tonnes to 150 million tonnes this year, effectively cutting the global supply by 35% from previous levels. This development spurred major commodity companies to construct refineries within Indonesia, triggering a surge in capacity and resulting in excess supply. Consequently, nickel inventories in LME warehouses increased by 90,000 tonnes this year, surpassing 250,000 tonnes. On the demand side, while global purchases of stainless steel remain subdued, this has been counterbalanced by the rising use of nickel in electric vehicle production.