Chinese nickel producers weigh output cuts in Indonesia

what happened

Nickel Industries said producers in the Indonesia Morowali Industrial Park (IMIP), a central hub for the metal, will coordinate production reductions. Managing Director Justin Werner told analysts on an earnings call that measures will cover all operations in the park, but he gave no percentage. He added that non-integrated producers are likely to be hit hardest.

According to Reuters, citing people familiar with the matter, Chinese operators are weighing coordinated cuts after a meeting earlier this week. Options under review include halving output of mixed hydroxide precipitate (MHP), an intermediate used in EV battery chemicals, and trimming nickel pig iron (NPI) output by 20%. Size and timing have not been settled, and Tsingshan, Huayou and CNGR are among the companies involved.

LME nickel rose 3.7% on Wednesday after the report. The metal has slipped by almost a quarter from its this-year high of $20,000 a ton, reaching $15,070 last week, its weakest level since December 2025. Producers also face higher costs from sulphur shortages, tighter Indonesian ore quotas and a dry spell linked to El Niño that delayed another project's ramp-up.

why it matters

For the market, coordinated cuts could tighten supply of battery and stainless steel feedstock if prices keep falling. The final volumes and timing of any reductions will be key to watch.

market impact

Nickel: possible output cuts in Indonesia could tighten supply of battery and stainless steel feedstock

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