Indonesia, the world's largest producer of nickel, will cut production in 2026, and nickel prices hit a nine-month high

The Zhitong Finance App learned that nickel prices hit their highest level in nine months, boosted by plans to cut supply in Indonesia, the world's largest producer. As of press release, LME nickel futures rose more than 5% to $16,600.88 per ton. According to reports, Indonesia's Minister of Energy and Mineral Resources Bahlil Lahadalia said that in order to better match supply and demand, nickel production will be reduced in 2026.

Indonesia's nickel production has grown rapidly over the past ten years. Currently, the country's nickel production is close to 70% of the world's total production, making it the world's largest nickel producer. Indonesia's planned production cuts in 2026 are mainly in response to falling nickel prices. Reports in early December said that according to the Indonesian government's work plan and budget for next year, the 2026 nickel production target is about 250 million tons, which is nearly one-third lower than the 2025 target of 379 million tons.

Nickel is widely used in stainless steel and electric vehicle batteries. However, due to the emergence of alternative chemical components and weak demand for electric vehicles due to declining electric vehicle policies in Europe and the US, nickel is one of the worst performing industrial metals this year. Despite low nickel prices for most of this year, supply in Indonesia continued to increase, leading to a rapid increase in warehouse stocks tracked by the London Metal Exchange (LME).

Indonesia's nickel production is the key to determining next year's nickel price trend. The Indonesian government is expected to control supply by tightening the issuance of mining quotas (RKAB). In addition to tightening mining quotas to control supply, according to previous reports, Indonesia's Ministry of Energy and Mineral Resources also plans to revise the nickel ore benchmark pricing formula in early 2026. Meidy Katrin Lengkey, Secretary General of the Indonesian Nickel Miners Association (APNI), revealed that one of the main points of the revisions is that the government will begin treating nickel-related minerals (particularly cobalt) as separate commodities and levying royalties on them.