FX.co ★ Nickel Drops to 6-Week Low

Nickel futures have declined to $15,000 per tonne, marking the lowest point in the past six weeks and standing close to the over-four-year low of $14,150 reached in April. This decrease reflects market sentiment that recent production cuts from Indonesia are insufficient to address concerns of an oversupply. The Indonesian government has scaled back its nickel mining quotas by 120 million tonnes, reducing global supply by 35% from current levels. This adjustment comes in response to the rise of Chinese smelting initiatives in Indonesia following a 2020 ban on exporting nickel ores. As of September, Indonesia hosts 44 nickel smelting operations, a significant increase from just four operations a decade ago. Concurrently, available nickel warrants at London Metal Exchange warehouses have increased by 30,000 tonnes since the beginning of the year, reaching a total of 180,230 tonnes by the end of May. Additionally, persistent doubts about whether the U.S. administration will impose tariffs on trading partners in July have continued to exert pressure on base metals.