By: Editorial Team, StoneX Media
Global nickel markets are entering a more politically controlled phase where government intervention is becoming as important as underlying industrial demand. Indonesia has rapidly expanded its dominance across the nickel supply chain over recent years, but policymakers are now shifting focus away from maximizing output and toward defending profitability and domestic strategic control. At the same time, the Iran conflict and tightening sulfur availability are creating new pressure points across the refining process. Consequently, nickel markets are increasingly reacting to supply chain bottlenecks and geopolitical disruptions rather than broad manufacturing optimism.
Natalie Scott-Gray, Senior Metals Analyst at StoneX, has tracked base metals markets through multiple commodity supercycles and geopolitical disruptions. Her analysis combines detailed knowledge of mining economics, refining constraints, and global metals trade flows, giving her a distinct perspective on how Indonesian policy shifts are reshaping nickel pricing and industrial supply chains.
Indonesia is deliberately tightening global nickel supply after years of aggressively expanding production capacity. Scott-Gray explains that Indonesian policymakers want nickel prices trading closer to "18 to $19,000 per tonne" after prolonged weakness pushed margins lower across the industry. Consequently, the government has reduced mining and smelting quotas, significantly limiting available production. These restrictions are already impacting major producers, including Weda Bay, which Scott-Gray notes has potentially moved toward care and maintenance after rapidly exhausting its quota allowance. Over time, these interventions are likely to reinforce Indonesia’s dominance over global nickel pricing while tightening availability across international supply chains.
Nickel refining margins are now coming under additional pressure from sulfur shortages linked to the Iran conflict and disrupted Middle East trade flows. Scott-Gray emphasizes that sulfur prices have already "jumped by about 80% this year", creating major cost pressures for Indonesian high pressure acid leaching producers that depend heavily on imported sulfur. Indonesia currently has roughly "76% reliance on the Middle East to get sulfur into the country", making the market especially vulnerable to disruption through the Strait of Hormuz. As a result, several major producers have already reduced output, including one large operator that "had to cut output by 50%" because of escalating sulfur costs. If physical sulfur shortages intensify through the second half of 2026, nickel supply risks could accelerate significantly even as broader industrial demand starts to weaken.
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--- Written by Gus Farrow, Senior Manager, StoneX TV
--- Expert: Natalie Scott-Gray, Senior Metals Analyst at StoneX
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