Nickel has spent 2026 behaving less like a market and more like a policy decision. After a rally to nearly US$20,000 a tonne in May and a slide back toward US$16,000 by July, the metal is climbing again this week on fresh reports that Indonesia is preparing deep ore quota cuts, with the London Metal Exchange three-month contract trading around US$18,460 a tonne. For ASX investors, the swings matter because the local nickel sector is a mix of a growing Indonesian processor, a suspended giant and a miner that is winding down its flagship operation.
Price action: a year of whiplash
Nickel opened 2026 near US$14,000 a tonne and surged on the back of Indonesia’s decision to trim its 2026 RKAB ore quota by roughly a third, from about 379 million wet tonnes in 2025 to somewhere near 270 million. The rally stalled in the northern summer as buyers questioned whether quotas would be topped up mid-year, and prices dropped to a 2026 low around US$16,000. The latest bounce shows how quickly sentiment flips when Jakarta signals tighter supply. Our earlier look at Indonesia’s quota decision and what ASX investors are watching flagged this exact risk.
Why the cost curve matters
Even at current levels, a large slice of the industry is under pressure. Analysts estimate that the 75th percentile of the global cost curve sits near US$17,900 a tonne in 2026, up sharply from last year, partly because sulfur, a key input for high pressure acid leach plants, spiked from under US$600 to as high as US$1,300 a tonne. That means prices in the high US$16,000s leave many operators with thin or negative margins, which is the underlying reason Indonesia can tighten supply without destroying its own industry. It also explains why we described ASX miners as watching from the sidelines rather than rushing to restart.
Nickel Industries: the ASX proxy for Indonesian growth
Nickel Industries (ASX: NIC) is the most direct listed play on the Indonesian story. In its June quarter update, the company reported group adjusted EBITDA of US$120.5 million, with the Hengjaya mine lifting EBITDA 58 per cent on higher realised ore prices. Rotary kiln electric furnace output slipped 8 per cent to 27,864 tonnes of nickel, and operating costs rose on maintenance. The bigger news is the pipeline: the ENC high pressure acid leach project produced first mixed hydroxide precipitate in July, with cathode targeted shortly after, and the company is pursuing stakes in further HPAL capacity. Investors can read the full detail in the company’s ASX quarterly announcement.
BHP and IGO: two very different stories
On the Australian side of the ledger, BHP’s Nickel West remains suspended and under strategic review, with the company spending an estimated A$450 million a year to keep a restart option alive and a decision targeted by February 2027. Any firm restart signal would be a major swing factor for local sentiment. IGO, meanwhile, is bringing Nova-Bollinger towards the end of its life, with mining expected to finish around the December 2026 quarter. Neither company offers the same near-term leverage to a rising nickel price that Nickel Industries does, which is why sector rallies have often been uneven across ASX tickers.
Supply, demand and the surplus debate
The balance sheet of the market is genuinely contested. The International Nickel Study Group has moved from a sizeable 2025 surplus towards a small deficit for 2026, yet inventories remain heavy, with combined LME and Shanghai stocks near 375,000 tonnes. Headlines this week also point to forecasts flipping back towards surplus, which tells you how sensitive the outlook is to quota assumptions. Readers wanting a broader global view can check the Resources and Energy Quarterly from the Department of Industry, Science and Resources and the US Geological Survey nickel data.
Policy angle: nickel as a critical mineral
Canberra has been building its toolkit for strategic metals, and nickel sits in the same conversation as the minerals covered in our piece on the Critical Minerals Reserve becoming law. For Australian producers, government support, offtake security and processing incentives could matter as much as the spot price when it comes to deciding whether idle capacity returns.
What to watch next
- Confirmation from Jakarta on any further RKAB quota cuts or mid-year top-ups.
- First nickel cathode and ramp-up progress at the ENC HPAL project.
- Nickel Industries’ planned November settlement for its TMI HPAL stake.
- BHP’s Nickel West review, with a decision targeted by February 2027.
Frequently Asked Questions
Why does Indonesia matter so much to the nickel price?
Indonesia now supplies the majority of the world’s mined nickel, so changes to its ore quotas and export rules move global supply expectations almost instantly.
Which ASX companies are most exposed to nickel?
Nickel Industries has the most direct exposure through its Indonesian operations, while BHP and IGO are influenced by Nickel West’s review and the closure of Nova-Bollinger respectively. Exposure for each is very different, so company filings are the best place to check.
This article is general information and market commentary only. It does not take into account your personal objectives, financial situation or needs, and it is not financial product advice. Commodity and mining equities carry a high degree of risk, including price volatility and the potential loss of capital. Consider seeking advice from a licensed financial adviser and read our full Disclaimer before making any investment decision.