FX.co ★ Nickel Futures Fall to 1-Month Low

Nickel futures have decreased to $15,123 per tonne, marking the lowest level in a month, primarily due to the oversupply from Indonesia impacting the market significantly. The increased production in Indonesia has inundated global supply chains, driving inventories on the London Metal Exchange (LME) up to 308,000 tons—the highest since the LME commenced publishing this data in 2020. This surplus largely results from Indonesia's substantial production of nickel intermediates, destined for Chinese refineries. Consequently, the proportion of Chinese-origin nickel in LME reserves has dramatically risen from zero in August 2023 to approximately 65%. Additionally, Indonesian brands have begun to access the LME system directly, with 8,838 tons of certified metal documented at the end of August. In response to this situation, Jakarta has intensified its regulatory measures within the sector. This includes a reduction in production quotas by 120 million tons to 150 million for the current year and a reduction in the validity of mining permits to just one year, aiming to better regulate production levels and stabilize prices.