Nickel prices retreat as inventory concerns outweigh Indonesia supply risks

• LME nickel falls back to $17,000/t range
  
  
• Indonesia supply concerns remain but premium fades
  
  

SteelDaily: LME nickel prices closed at around $17,680/t, remaining largely range-bound d-o-d, as growing inventory concerns and macroeconomic headwinds outweighed supply-side risks from Indonesia. Nickel prices had climbed to the $19,000/t range earlier in June but later retreated to the mid-to-high $17,000/t range. The decline reflects rising exchange inventories and weakening investor sentiment, despite ongoing uncertainty surrounding Indonesian nickel ore supply restrictions.

Market sentiment weakened after combined inventories on the London Metal Exchange (LME) and Shanghai Futures Exchange (SHFE) climbed to nearly 469,000 t, the highest level since 2015. Rising refined nickel stocks, particularly in China, reinforced concerns over oversupply amid sluggish stainless steel demand.

Indonesia premium loses momentum

Nickel prices had been supported since February by Indonesia's plans to reduce nickel ore production quotas and tighten mining approvals. However, market participants increasingly believe the supply risks have already been priced in.

Concerns have also eased following reports that nickel pig iron (NPI) will be excluded from Indonesia's proposed export control framework. Additionally, the market remains cautious about whether Indonesia will maintain current ore production restrictions throughout the year, given its history of adjusting quotas.

Macro pressures weigh on metals

Broader macroeconomic uncertainty also pressured nickel prices. Concerns over US interest rates, inflation, and a stronger dollar weakened investor appetite across the non-ferrous metals complex, contributing to the recent correction.

Outlook

Nickel prices are expected to remain volatile in the near term, with the market likely to seek direction around current levels. While elevated inventories and weak stainless steel demand may continue to weigh on sentiment, ongoing uncertainty surrounding Indonesia's ore supply policies could provide support and limit further downside.

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