China, Indonesia’s Nickel Cuts: A Bid to Boost Prices Amid Oversupply

Nickel prices plummeted by around 40% from a year ago due to an oversupply of Chinese and Indonesian NPI

According to a report by Reuters on the 12th (local time), China and Indonesia plan to cut nickel production this year in response to falling nickel prices.

According to sources, nickel production in China and Indonesia will drop by at least 100,000 tons this year. Traders explained to Reuters, “Additional cuts by producers are necessary, not just to prevent simple losses but to raise prices and reduce the oversupply in the market.”

Concerns about a decrease in supply from Russia after the outbreak of the Ukraine war caused nickel prices to soar in 2022. Since then, the supply from Indonesia has increased dramatically, and the current nickel price has plummeted nearly 40% from a year ago. As of the 9th, nickel’s spot price was $15,668 per ton.

Experts pointed out that nickel pig iron (NPI) is the cause of the sharp fall in nickel prices and oversupply. Although the quality is low, the inexpensive NPI is considered an alternative to high-end nickel. 70% of the world’s nickel supply comes from China and Indonesia, where most nickel is NPI.

“The cost of producing NPI in China and Indonesia is around $10,000 to $11,000 per ton and $12,000 per ton, respectively, making it very difficult to make a profit,” noted Macquarie analyst Jim Lennon. “If NPI prices rise to approximately $11,000 per ton, supply adjustments will be made in China and Indonesia.” He added, “We need to cut another 100,000 tons or more to balance the market.”