FX.co ★ Nickel Extends Bearish Momentum

Nickel futures dipped below $15,100 per tonne in August, completely wiping out the gains made since the beginning of the year and continuing the downward trend that began in late 2022. This decline was largely due to the overexpansion of Indonesia's nickel industry after the country imposed a ban on ore exports in 2020. In response, major nickel consumers set up refining operations within Indonesia, causing a surge in capacity and leading to an excess supply. Despite the Indonesian government's decision to cut nickel mining quotas by 120 million tonnes to 150 million tonnes this year—a move intended to reduce global supply by 35%—market prices suggest that the oversupply issue remains largely unaddressed. Nickel stockpiles in the London Metal Exchange warehouses increased by 40,000 tonnes this year, reaching 195,000 tonnes, a result of strong production from Chinese refiners based in Indonesia. On the demand side, manufacturing demand remained weak, as indicated by Chinese PMI data, and Beijing's efforts to curb battery production further dampened purchase projections.