CICC: Indonesia's tightening RKAB target is expected to support the rise in nickel prices

The Zhitong Finance App learned that CICC released a research report saying that according to the Indonesian Nickel Miners Association, the nickel production target proposed by the government in the 2026 Work Plan and Budget (RKAB) is about 250 million tons, a sharp drop from the 379 million tons set in 2025. The proposed nickel ore production target of 250 million tons is a government-level target, and the final implementation and distribution are still uncertain. Considering that the current tightening of nickel ore quotas has little impact on the Indonesian economy, and that the increase in nickel prices is conducive to increasing taxes and increasing the value of local resources, there is a high probability that the nickel ore quota policy will finally be implemented.

CICC's main views are as follows:

Indonesia is the world's largest supplier of nickel ore, and the influence of industrial policy is significant

Indonesia is the world's largest supplier of nickel ore. According to USGS, in 2024, Indonesia's nickel reserves are about 55 million metal tons, accounting for 42% of the world. Indonesia's nickel ore production is about 2.2 million metal tons, accounting for 59% of the world. Indonesia has strengthened its control over the nickel industry through industrial policies such as banning exports of raw ore, approval of nickel ore quotas, and guide prices for nickel ore. Its industrial policy has an important influence on nickel prices.

If Indonesia tightens RKAB quotas, it is expected to lead to a marginal improvement in nickel supply and demand

The proposed nickel ore production target of 250 million tons is a government-level target, and the final implementation and distribution are still uncertain. Considering that the current tightening of nickel ore quotas has little impact on the Indonesian economy, and that the increase in nickel prices is conducive to increasing taxes and increasing the value of local resources, there is a high probability that the nickel ore quota policy will finally be implemented. According to the Indonesian Nickel Miners Association, the country's nickel production will be about 250 million tons by October 2025, and the maximum output will reach only 300 million tons by the end of the year. If the final nickel ore production quota for 2026 is 250 million tons, a 17% reduction compared to 2025, it is expected to drive a marginal improvement in the nickel supply and demand pattern in 2026, and nickel prices may resume the upward trend.

Indonesia intends to strengthen its control over resources, which is conducive to stabilizing the long-term center of nickel prices

The Secretary General of APNI clearly stated that the current reduction in production targets is mainly aimed at stopping the further decline in nickel prices. This reduction in production targets reflects the intention to affect global nickel prices. CICC believes that the direction of Indonesia's industrial policy is gradually being clarified. The nickel price has a “bullish option” attribute. If nickel prices are low, it will lead to tightening and hedging Indonesian supply, which is conducive to stabilizing the long-term central expectations of nickel prices.

Investment advice

CICC believes that the tightening of nickel ore quotas is conducive to improving the nickel supply and demand pattern, that Indonesia's industrial policy supports the medium- to long-term nickel price center, and that rising nickel and cobalt prices are expected to drive up producers' profits. From a long-term perspective, the acceleration of solid-state battery industrialization is expected to increase the penetration rate of ternary batteries. Nickel-cobalt companies have ushered in an opportunity to reassess and reaffirm their optimism about cobalt-nickel-related targets.

risk factors

Indonesia's quota cuts fell short of expectations; downstream demand weakened; supply growth exceeded expectations.