Key Moments
- Nickel prices climbed from USD14,110 per tonne in mid-December to USD18,725 per tonne on January 29, before stabilizing in a USD16,280-17,490 per tonne range into April 10.
- A new Indonesian nickel ore benchmark price formula and disruption to sulphur shipments from the Middle East have significantly increased cost pressures on nickel refiners.
- The International Nickel Study Group projects a global primary nickel deficit of 32,200 tonnes in 2026, with consumption at 3.75bn tonnes and production at 3.72bn tonnes.
Nickel Price Rally Rekindles Stainless Steel Cost Fears
A combination of a new Indonesian pricing policy and supply chain disruption linked to the Middle East crisis has reignited concerns that higher nickel costs will play a central role in driving stainless steel prices higher.
Nickel values surged three months ago, with prices reaching USD18,725 per tonne on January 29. The London Metal Exchange (LME) spot daily cash price had previously risen from a low of USD14,110 per tonne on December 16, after Indonesia – the world’s largest nickel producer – proposed cuts to ore mining quotas.
Indonesia’s Ministry of Energy and Mineral Resources later confirmed plans to reduce annual nickel ore production quotas by roughly one third, to a range of 260-270 million tonnes. Following that confirmation, nickel prices steadied, trading between USD16,280 and USD17,490 per tonne from the start of March through April 10.
Policy Shift in Indonesia Lifts Ore Costs
From April 15, nickel received additional support when Indonesia’s Ministry of Energy and Mineral Resources implemented a revised nickel ore benchmark price (HPM) formula. Under the updated methodology, the correction factor for calculating the value of nickel in 1.6% grade ore was raised from about 17% to 30%.
The new benchmark also factors in the value of associated iron and cobalt contained in the ore.
Middle East Crisis Disrupts Refining Inputs
The ongoing conflict in the Middle East is further shaping stainless steelmakers’ expectations for nickel prices. Disruptions to shipping through the Strait of Hormuz are constraining deliveries of sulphur to Indonesian nickel refining operations, which depend on the Middle East for 75-80% of their sulphur requirements.
Sulphur is the primary raw material used to produce sulphuric acid, a critical reagent in the nickel refining process. According to Reuters, recent logistics interruptions have already forced Indonesian nickel processors to scale back output by more than 10%.
This analysis was originally published in the April edition of MEPS International’s Stainless Steel Review, which provides market commentary, stainless steel price data, indices and forecasts for major markets in Europe, Asia and North America. The publication notes that interested readers should contact MEPS for subscription information.
Demand Outlook Tightens Market Balance
Reports highlighting these growing risks to nickel supply have emerged alongside a new outlook from the International Nickel Study Group, which anticipates firmer nickel demand. In a report dated April 22, the group projected that global primary nickel consumption will increase to 3.75bn tonnes in 2026, up from 3.60bn tonnes in 2025.
At the same time, the group forecast that primary nickel production will reach 3.72bn tonnes in 2026, compared with 3.88bn tonnes in 2025. This 4.2% year-on-year decline in output would translate into an overall deficit of 32,200 tonnes in 2026. The report stated that this would mark the first supply shortfall since 2021.
| Year | Global primary nickel consumption (bn tonnes) | Global primary nickel production (bn tonnes) | Balance (tonnes) |
|---|---|---|---|
| 2025 (forecast) | 3.60 | 3.88 | Surplus of 280,000 |
| 2026 (forecast) | 3.75 | 3.72 | Deficit of 32,200 |
Nickel Prices Gain Momentum in April
Nickel’s uptrend continued in April. The LME spot daily cash price for Class 1 nickel advanced by 14.5% to reach USD19,270 per tonne between April 7 and April 27.
These gains are expected to feed through to higher input costs for stainless steel producers, with 300-series grades particularly exposed to nickel price movements. Should nickel values remain elevated, market participants anticipate higher alloy surcharges in the United States in June, as well as additional price support for stainless steel in Europe and Asia.
This prospective increase would compound existing upward cost pressures stemming from higher energy and transportation expenses linked to the Middle East crisis.
Macroeconomic Risks Cloud Stainless Steel Demand
MEPS’s research partners have raised broader macroeconomic concerns about the implications of the US-Israeli war with Iran. The International Nickel Study Group’s working assumptions include an increase in nickel demand from the stainless steel sector this year. However, respondents to MEPS in the countries covered by the report expressed worries that widespread price inflation could delay previously anticipated interest rate cuts.
Such a scenario could weigh on investment in sectors that consume stainless steel, potentially tempering demand even as input costs rise.
The article also notes that the International Monetary Fund has lowered its global GDP growth forecast for 2026 from 3.4% to 3.1% in response to the ongoing Middle East conflict. At the same time, the IMF now expects inflation to reach 4.4% in 2026, compared with a rate of 4.1% projected for 2025.
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