FX.co ★ Nickel Falls to 7-Month Low

In November, the price of nickel futures in the UK fell to $14,650 per tonne—the lowest since a four-year low of $13,900 was reached in April. This decline represents a significant underperformance compared to other base metals, largely due to increasing oversupply. The nickel production landscape has been notably influenced by Indonesia's decision to ban ore exports in 2020, resulting in over-expansion of its sector. This prompted major nickel consumers to set up refining operations within Indonesia, causing a surge in production capacity and consequent supply surpluses. Although the Indonesian government has reduced nickel mining quotas by 120 million tonnes to 150 million this year—effectively decreasing the global supply by 35%—market observations show that low bidding prices throughout the year suggest that these measures have not effectively alleviated the oversupply situation. Additionally, nickel stockpiles in London Metal Exchange (LME) warehouses have increased by 90,000 tonnes this year, now exceeding 250,000 tonnes. On the demand side, while there has been limited purchasing of stainless steel globally, this has been somewhat mitigated by the rise in nickel usage within the electric vehicle sector.