FX.co ★ Nickel Holds in Tight Range

Nickel futures recently held steady at $15,000 per tonne, maintaining a narrow trading range since mid-April as the market navigates the potential impact of production reductions by Indonesia, a leading global producer. This development comes as the Indonesian government has scaled back nickel mining quotas to 150 million tons this year, a substantial 35% decrease from current output levels. This strategic decision follows the influx of Chinese smelting operations established in Indonesia after the country banned the export of raw nickel ores in 2020. As of September, Indonesia hosted 44 nickel smelting facilities, a significant increase from just four a decade ago. Nevertheless, the market anticipates that supply will remain sufficient, given that prices are relatively close to the four-year low of $14,450 observed on April 8th, and LME warehouse inventories have surged by over 100% year-on-year, exceeding 200,000 tons. Concurrently, ongoing trade tensions between the United States and China, coupled with doubts regarding the U.S. administration's approach to international trade agreements, continue to suppress manufacturing activity.