In late August 2025, protests in Jakarta, the capital of Indonesia, and other areas caused casualties and property damage. This introduced new variables into an already complex nickel market. Market sentiment reacted swiftly following the incident. Although the core conflicts were concentrated in urban centers like Jakarta and Makassar and did not directly impact production activities at the major nickel industrial parks on Sulawesi Island, investor anxiety increased.
As of 11:00 a.m. on September 1, LME nickel was up 0.49% at $15,515/tonne, while SHFE nickel futures rose 1.4% to Yuan 123,320/tonne. As the world's largest nickel supplier, any social unrest in Indonesia could trigger concerns over potential supply disruptions, creating a short-term "sentiment premium" that pushes prices higher. However, the current sentiment-driven rally lacks sustained momentum unless the protests lead to actual disruptions in production and shipments.
In the NPI sector, rising offers on the mine side towards the end of August kept production costs elevated, driving up NPI prices. The production of 300-series stainless steel crude remained high in August, and the demand for raw materials in stainless steel remained high. Furthermore, a recovery in stainless steel futures and spot markets led to gradually active inquiry activity in the market, with transactions showing improvement. Although the destocking pace for 300-series inventories slowed in August, a significant overall volume reduction was evident. Currently, acceptable stainless steel profits coupled with reduced sales pressure have lessened mills' willingness to press down raw material NPI prices.
In the nickel sulfate market, the production of ternary precursor showed signs of recovery. Meanwhile, increased orders for exports to South Korea boosted demand for nickel sulfate. However, scheduled maintenance shutdowns at individual nickel salt plants in August limited overall production capacity utilization. This combination of rising demand and constrained supply led to tighter market supply in August. Compounded by tight MHP supply and a 2% increase in its discount coefficient, cost pressures on nickel sulfate intensified noticeably. Under the influence of these multiple factors, nickel sulfate prices traded with momentum.
Overall, the current volatility in the nickel market results from a combination of short-term geopolitical risk sentiment and the underlying resilience of the industry chain fundamentals. However, the premium brought by Indonesia is unlikely to be long-lasting. Demand from downstream stainless steel and new energy batteries continues to provide fundamental support for nickel prices.
Written by Cora Ji, jiruyan@mysteel.com
