Nickel prices faced a challenging third quarter in 2026, sliding to fresh yearly lows as the market grappled with uncertainty surrounding supply controls in Indonesia. While the metal saw a brief recovery in July, those gains were quickly erased by a combination of rising exchange inventories and cooling demand for batteries. By mid-October, the three month contract on the London Metal Exchange hit a year to date bottom of 15,100 dollars per metric ton, marking a sharp decline from the levels seen at the start of the summer.
Much of this instability stems from Jakarta’s complex management of mining quotas. Earlier in the year, the Indonesian government set strict limits on nickel ore production to prop up prices, creating an artificial shortage for downstream smelters. However, throughout the third quarter, officials began selectively approving revised plans for several dozen companies to alleviate these shortages. This perceived softening of supply constraints, coupled with a surge in ore imports from the Philippines, has left investors wary that any attempt to maintain a price floor may be slipping.
Beyond supply logistics, shifting technology in the electric vehicle sector is weighing heavily on long term sentiment. While stainless steel consumption remains steady, nickel is increasingly losing its dominance in EV batteries to lithium iron phosphate chemistry. Even recent adjustments to Indonesia’s ore benchmark pricing, intended to lower taxes for miners and support margins for high pressure acid leach producers, have done little to stimulate new demand.
Looking ahead toward the end of the year and into 2027, analysts expect continued volatility. Producers are currently battling external pressures including constrained sulfur supplies due to geopolitical tensions in the Middle East, which have spiked operational costs for certain refineries. As investors turn their attention toward next year’s quota applications and potential changes to export controls, the market remains hypersensitive to every signal coming out of Indonesia.