Nickel Price Trends: Q3 2026 Review and Forecast

Indonesian policy shifts keep pressure on prices

Indonesia set its 2026 Work Plan and Budget (RKAB) at 260 million to 270 million MT of nickel ore in February, well below smelters’ estimated needs of 300 million to 310 million MT, according to a report from S&P Global Energy. The move effectively created a shortage among the country’s downstream upgraders.

There were concerns that a mid-year policy shift could have meant more metal production, risking further downward price pressure. Miners were able to submit revised quotas until July 31, but according to Benchmark Mineral Intelligence, the Indonesian government declined to raise RKAB to the higher range some were asking for.

In August, however, the ministry began approving revised plans for dozens of companies without disclosing volumes, after signaling that additions would be selective and aimed at smelters facing ore shortages.

As of mid-September, Indonesia’s Ministry of Energy and Mineral Resources was still evaluating requests from about 50 companies. Eramet (EPA:ERA,OTCPL:ERMAF) said on September 10 that its Weda Bay nickel joint venture with Tsingshan Holding Group and PT Antam had resumed mining after a four month halt.

Ore imports have helped fill the mining supply gap. Indonesia imported 11.4 million MT of nickel ore from the Philippines between January and July, up 82 percent from a year earlier.

In an email to the Investing News Network, S&P Global Energy nickel analyst Joenelle Donato explained that markets are approaching Indonesia’s decisions to restrain output with growing caution.

“The market continues to view Indonesia as the leading source of global nickel supply, but is becoming more cautious regarding developments in Indonesia’s ore supply policies,” he said.

Donato also noted that the Indonesian government has shown flexibility on ore shortages at domestic smelters, while Philippine imports are giving some operations an additional source of feedstock. As a result, he said, market participants are watching quota revisions and ore availability most closely.

On September 15, Indonesia revised its ore benchmark price formula (HPM) again. For ore with 1.2 percent nickel, the benchmark fell 45 percent, sinking to US$24.89 per wet MT from US$44.97, Shanghai Metals Market (SMM) reported. That puts it below SMM’s own delivered price of about US$27.

Additionally, SMM reported that the old benchmark had sat US$17 to US$18 above market prices since mid-April. Because the HPM also underpins royalties, the revision lowers miners’ tax burden.

Donato said the revision to the HPM formula was significant for limonite because it brought benchmark prices closer to current conditions: “For high-pressure acid leach (HPAL) producers, lower limonite benchmark prices could help offset some of the cost pressure from elevated sulfur prices, providing support to operating margins.”

However, he expects the effect on nickel’s effective cost floor to be limited, since the revision only covers low-grade limonite and does not materially affect the higher-grade feedstock used in other primary nickel production routes.

Timing also matters for HPAL producers, which process limonite into battery-grade nickel intermediates — key sulfur inputs through the Middle East have been constrained since February due to the US-led war against Iran.

HPAL operations need roughly 10 MT of sulfur per MT of nickel, so every US$100 increase in sulfur adds about US$1,000 per MT to costs, Red Door Research’s Jim Lennon explained in an LME webinar in July. He said some producers had been forced to cut output by up to 50 percent, with sulfur costing US$1,100 to US$1,200 per MT.

An Indonesian policy that took effect on June 1 is also keeping traders guessing.

Government Regulation No. 24 of 2026 makes state-owned PT Danantara Sumberdaya Indonesia (DSI) the mandatory sole export intermediary for ferroalloys, including ferronickel. Benchmark Mineral Intelligence estimates that one-third of global primary nickel production will now be under state control.

Bloomberg reported that DSI would take over specific export activities as early as September, but no later than January 1, 2027. SMM noted that the market has not fully digested the combination of a state-determined selling price and a state-imposed margin, and where nickel pig iron sits within new regulations remains unresolved.

Outside Indonesia, Donato said nickel producers and developers continue to face a challenging operating environment at the commodity’s current prices. Indonesia’s shifting nickel policies have pushed some Chinese investors to diversify into projects in Madagascar, Tanzania and New Caledonia.

Interest in non-Indonesian supply is growing, but capital remains selective. “Financing is likely to remain concentrated in projects that can demonstrate high feasibility alongside current market conditions,” he said.

Stainless steel holds up while batteries lose ground

The International Nickel Study Group (INSG) expects the stainless steel sector to expand further in the second half of 2026 and through 2027. This sector remains the backbone with steady demand growth for nickel, while the battery side is a different story as demand grows more gradually than initially anticipated.

Benchmark Mineral Intelligence said EV sales underperformed in the year’s third quarter, leading top battery makers like Contemporary Amperex Technology (SZSE:300750,HKEX:3750), better known as CATL, to curtail nickel-cobalt-manganese cell production and reduce cathode orders toward the end of the quarter.

By September 23, nickel sulfate prices in China had fallen 13 percent from the end of Q2 to US$4,247. Mixed hydroxide precipitate prices also fell 17.3 percent to US$7,484 as payables slipped from 93.5 percent to 88.5 percent.

S&P Global Energy’s Donato explained that stainless steel remains the primary source of nickel demand in the short term, but he sees batteries taking a larger demand share in the future.

“The longer-term growth story lies in batteries, specifically premium EVs that favor nickel-containing chemistries due to their higher energy densities and longer ranges,” he commented.

Speaking about the loss of US EV tax credits, Donato said the change may create headwinds for EV demand, but the bigger issue is the continued shift to more affordable LFP chemistry, which has contributed to slowing battery demand growth for nickel, at least in the medium term.

Nickel price forecast for 2026

The INSG’s latest forecast shows how quickly the nickel narrative has shifted. In its October 13 outlook, the group projected a 2026 surplus of 19,000 MT, reversing the 32,000 MT deficit it forecast in April. It expects the surplus to widen to 70,000 MT in 2027, with demand reaching 4 million MT and production rising to 4.07 million MT.

In a June 30 interview, Wood Mackenzie nickel market analyst Adrian Gardner told the Investing News Network that he expected nickel to hold near its then-current level of about US$16,400 through the end of 2026 and possibly into 2027, provided a Middle East peace deal was signed. Prices ended the quarter just over US$16,000.

His reasoning centered on sulfur. Gardner suggested that even if the situation in the Middle East were to stabilize, there would still be a six to nine month lag before a sulfur supply recovery, with Indonesian miners paying up to US$1,100 per MT versus US$300 to US$400 before the Middle East hostilities began. He also pointed to weak limonite economics, which had pushed some expansion plans into early 2027, and said nickel would likely need to move sustainably above US$20,000 before western producers restart idled operations or advance development projects.

For Donato, the near-term outlook still runs through Jakarta. He expects Indonesia’s supply policies to remain the main driver, with changes to ore quota allocations and further evolution in government nickel policy as key risks.

“Any meaningful relaxation on supply constraints could cause downward pressure on prices, while tighter ore availability could provide support,” he explained. Investors may want to watch applications for Indonesia’s 2027 quotas, which can be submitted until November 15, and the January 1, 2027, deadline for DSI export controls.

LME warehouse inventory, which stood at 284,682 MT at the end of September, is another signal, as is whether lower limonite benchmark prices and softer sulfur costs restore HPAL margins. Weak battery demand and the pace of China’s stainless steel recovery remain the main demand-side swing factors.