Nickel futures fell to around $16,700 per tonne in mid-March, their lowest level in more than two months, as growing global risk aversion weighed on industrial metals. Escalating tensions in the Middle East pushed oil prices higher and reignited inflation concerns, bolstering the US dollar and dampening expectations for imminent interest rate cuts by the Federal Reserve. This combination has exerted broad downward pressure on base metals.
At the same time, the conflict has underscored vulnerabilities in the nickel supply chain, particularly for battery-grade material, since processing is heavily dependent on sulfur supplies that move through Middle Eastern trade routes. Prolonged disruptions could raise operating costs for high-pressure acid leach (HPAL) projects and increase price volatility, even in the absence of direct ore shortages.
In Indonesia, supply risks have also intensified after authorities suspended operations at a nickel processing facility in Morowali following a fatal landslide, compounding ongoing regulatory scrutiny and adding further uncertainty to production prospects.