Nickel supplies in Indonesia, the world's largest nickel producer, could decline for the first time in years in 2026 due to a sulfur shortage caused by the Middle East conflict. However, the reduction will not be enough to eliminate even a short-term market deficit. This follows from a study by the analytical company Euler (data available to TASS).
Nicanor Halin, senior metals and mining analyst at Euler, notes that the production of nickel-containing pig iron in Indonesia (63% of global supplies) has been growing rapidly in recent years (+14% year-on-year in 2025 after +10% in 2024 and +21% year-on-year in 2023), putting pressure on world prices.
„Meanwhile, by the end of 2026, the country's nickel supply may decrease for the first time in many years due to a shortage of sulfur (caused by the conflict in the Middle East), on which more than 20% of local nickel production depends. However, this reduction will not be enough to create even a short-term market deficit, according to our estimates“, the study says.
Euler analysts note that the Indonesian government's actions create new structural risks to prices. On September 15, the country's authorities reduced the coefficient (CF) for calculating minimum prices for nickel ore to support the profitability of several local producers. As a result, market participants estimate that the cost of nickel production for inefficient Indonesian players will decrease from $18,000-20,000 per tonne to $15,000-17,000 per tonne based on nickel cathode.
Furthermore, despite the growing popularity of electric vehicles, their share of demand remains low: manufacturers prefer LFP technology, which does not use nickel. The stainless steel segment is also hindering growth.
According to Euler's estimates, the global nickel market will remain in surplus in 2026-2030.
The company also notes that, against the backdrop of an excess supply of nickel, stock prices on exchanges continue to grow and now exceed historical averages, virtually eliminating the price spikes seen in 2022-2023.