Global nickel market could enter deficit in 2026 as Indonesian supply risks grow, INSG says
Friday, June 5 2026 - 11:57 PM WIB
By Cepi Setiadi
The global nickel market could shift into a supply deficit in 2026 after four consecutive years of surplus, as tightening ore availability and regulatory uncertainties in Indonesia threaten production growth, according to the International Nickel Study Group (INSG).
Speaking at the Indonesia Critical Minerals Conference & Expo 2026 on Thursday, Ricardo Ferreira said the global primary nickel market remained in surplus between 2022 and 2025, with the surplus widening to around 285,000 metric tons in 2025.
"The market has been in surplus from 2022 to 2025, with the surplus reaching around 285,000 tonnes in 2025. However, there is a high degree of uncertainty in 2026 and the market could move into deficit," Ferreira said.
The outlook comes as nickel prices have rallied above $19,000 per ton, up more than 16% from the end of last year and significantly higher than the $15,000 to $16,000 range seen in recent years.
Indonesia remains the world's largest nickel producer, accounting for about 65% of global mine output in 2025. While the country's market share is expected to remain broadly stable in 2026, INSG forecasts global nickel mine production will decline by 5.6% next year after growing 11.2% in 2025.
Ferreira said Indonesia's mining quota, or RKAB, policy and changes to the country's nickel ore benchmark price mechanism could constrain future production growth.
Under the latest framework, Indonesia reduced nickel ore production quotas to around 250 million to 270 million tons from 379 million tons previously, with only about 210 million tons approved so far. The government has also moved to an annual approval process, extending permitting timelines.
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"The risk is that domestic ore demand, estimated at around 230 million to 300 million tonnes, could exceed approved supply volumes," Ferreira said.
While additional imports and ore supplies from ferronickel producers may partially ease the shortage, the industry is closely watching potential quota revisions later this year.
The revised benchmark pricing system, which now incorporates cobalt, iron and chromium components and introduces a pricing range mechanism, is also expected to raise ore costs, particularly for limonite ores that contain higher cobalt levels.
"The combination of higher ore prices and tighter ore availability represents a dual headwind for the industry heading into the second half of 2026," Ferreira said.
On the refined nickel side, global primary nickel production is forecast to fall 4.2% in 2026 after rising 8.1% in 2025. Indonesia is expected to remain the world's largest producer, accounting for 47.6% of global primary nickel output next year, followed by China with a 29.6% share.
Ferreira noted that most of the growth in global nickel production in recent years has come from Indonesia and China, but output in both countries is now expected to decline, increasing the likelihood of a tighter market balance and supporting nickel prices.
Editing by Alexander Ginting