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    Nickel market deficit risk from Indonesia quotas: key signals for mine planners

    March 12, 2026|

    Reviewed by Tom Sullivan

    Nickel market deficit risk from Indonesia quotas: key signals for mine planners

    First reported on MINING.com

    30 Second Briefing

    Nickel prices are set for further gains in 2026 as Macquarie now expects Indonesia’s tighter production quotas to flip the market from a previously forecast 90,000-tonne surplus into deficit, with LME nickel forming a price floor around $17,000–18,000 per tonne. Indonesian ore premiums have already driven about a $3,000 rise in nickel pig iron prices, while NPI output fell an estimated 10% year-on-year in January–February as furnaces shifted to higher-payable nickel matte. Additional constraints include limonite shortages, the Morowali tailings dam accident curbing MHP output, and disrupted sulphur supply from the Middle East delaying new capacity.

    Technical Brief

    • Since the quota change, prices of nickel metal, NPI, nickel sulphate and nickel ore have all risen.
    • Limonite ore shortages are directly constraining mixed hydroxide precipitate (MHP) output from laterite HPAL operations.
    • The Morowali tailings dam accident is further depressing MHP production beyond quota-related constraints.
    • Disrupted sulphur supply from the Middle East threatens acid availability for HPAL circuits and new projects.
    • January–February NPI output dropped 10% year-on-year, partly due to declining feed ore grades.
    • Furnaces switching from NPI to higher-payable nickel matte are structurally reducing NPI availability for stainless producers.

    Our Take

    Indonesia-linked nickel pieces in our database, including the February 2026 note on PT Weda Bay Nickel’s ore quota cut, consistently show policy-driven supply constraints feeding directly into LME price strength, which is the backdrop for Macquarie’s deficit call out to 2026.

    The December 2025 coverage of Indonesia’s proposed 34% ore cut already flagged potential tightening in global nickel supply, so this latest Macquarie view reinforces the idea that projects outside Indonesia (including US and Australian sulphide or laterite assets) could gain pricing power if they can reach market by the mid‑2020s.

    Macquarie appears frequently across recent base‑metal coverage in our database (copper, gold and now nickel), signalling that its house view on critical minerals pricing is increasingly being used as a reference point for financing decisions on new nickel and uranium projects such as those in Wyoming and Australia.

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    Prepared by collating external sources, AI-assisted tools, and Geomechanics.io’s proprietary mining database, then reviewed for technical accuracy & edited by our geotechnical team.

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