LME nickel rises on macro tailwinds, but Indonesia surplus limits upside

• LME nickel jumps 7% w-o-w on macro cues, stable US dollar
  
  
• Indonesian refined nickel output may rise by 10%in 2026
  
  

Nickel prices on the London Metal Exchange (LME) strengthened in the week ended 17 April, with the three-month contract closing at $18,560/t, up 7% w-o-w from $17,200/t. Exchange inventories declined 1.23% to 278,184 t, pointing to marginal tightening in visible stocks amid steady market participation.

Prices were supported by improved macro sentiment across the base metals complex. A stable US dollar, Chinas first-quarter GDP growth of 5%, and lower-than-expected US jobless claims of 207,000 lifted confidence and encouraged buying interest.

Supply-side pressures remain

Despite the rebound, market fundamentals remain mixed. Expanding supply, led by Indonesia, continues to weigh on the broader outlook. The countrys refined nickel output is projected to rise nearly 10% in 2026, widening the expected global surplus and capping stronger upside momentum.

However, sentiment improved after Indonesia trimmed its ore mining quota to 260-270 million wmt, tightening feedstock expectations. Higher ore prices have also raised costs across the value chain, supporting finished nickel prices.

Geopolitical tensions in the Middle East added another layer of uncertainty. Potential sulphur supply disruptions, a key input for HPAL operations, could affect near-term production flows and keep volatility elevated.

Demand growth moderates

Global nickel demand growth is expected to slow to around 3% in 2026 from 5.8% in 2025. Stainless steel production and clean energy applications continue to support consumption, but rising adoption of LFP battery chemistry is limiting incremental nickel demand.

Separately, Vale reported a 12% y-o-y rise in Q1CY'26 nickel output to 49,300 t, driven by stronger performance at Ona Puma, Voisey's Bay, and Long Harbour, reinforcing the ongoing supply expansion trend.

Outlook

Nickel prices are expected to remain firm but volatile in the near term. Macroeconomic support, higher input costs, and supply-side risks may underpin sentiment, but persistent Indonesian oversupply and slower demand growth are likely to restrict sharp gains.