Chronologically, on December 19, 2025, the Indonesian Nickel Miners Association (APNI) revealed in an interview that the government plans to cut nickel mining quotas in 2026. According to the annual Work Plan and Budget (RKAB) formulated by the Indonesian government, the nickel mining quotas for 2026 are approximately 250 million tonnes, nearly a one-third reduction compared to the 2025 with a mining quota of 379 million tonnes.
Upon the release of this news, market concerns over future supply surged, driving nickel prices higher. In the week following December 19, SHFE nickel prices registered a gain of over Yuan 15,000/tonne, rising above Yuan 130,000/tonne for the first time in a while. In the early hours of January 7, the most-traded SHFE nickel futures contract hit the daily limit up during the night session, surging 8% to Yuan 147,720/tonne. The LME 3M nickel price expanded its gains to 10%, reaching a high of US $18,735/tonne, the highest level since June 2024. Recent expectations of tightening nickel ore supply in Indonesia have further fueled market sentiment, pushing LME nickel prices above US $18,000/tonne for the first time in 14 months.
Sources: SHFE, LME
On December 31, 2025, Indonesia's Ministry of Energy and Mineral Resources (ESDM) issued a transitional policy for the 2026 RKAB, allowing companies, whose adjustment applications were not approved, to operate under the old regulations until the end of March 2026. According to a circular policy document released by the ESDM, mining companies that submitted requests to adjust their 2026 RKAB through the information system but had not received approval as of the deadline could continue to operate based on their previously approved 2026 RKAB as a legal basis for exploration and production activities, valid until March 31, 2026. During the transition period, companies may conduct mining activities, but the scale must not exceed 25% of the originally approved 2026 production plan.
Companies with prior approvals may carry out moderate mining activities in the first quarter of 2026, mitigating the impact of slower new approval processes.
At the end of December 2025, the Strategic Minerals Regulation and Control Agency (ARECOMS) of the Democratic Republic of the Congo issued Document No. 2025/006, allowing cobalt export quotas for the fourth quarter of 2025 to be extended until the end of March 2026.
The postponement of shipments from the fourth quarter of 2025 to the first quarter of 2026 was primarily due to the announcement of specific implementation measures. Since the extension had already been publicly disclosed earlier, it had no additional impact on expectations.
On December 30, 2025, the National Development and Reform Commission and the Ministry of Finance of the People's Republic of China jointly issued the Notice on Implementing Large-Scale Equipment Renewal and Consumer Goods Trade-in Policies in 2026. The 2026 consumer goods trade-in policy introduced significant upgrades in both coverage and implementation rules. In terms of products, while continuing subsidies for automobiles, home appliances, and digital products, the policy added subsidies for purchasing new smart glasses and smart home products.
In the notice, the most closely watched subsidy standards for automobile trade-in saw major adjustments, shifting from fixed-amount subsidies in 2025 to subsidies calculated as a percentage of the price of the new vehicle purchased. Under the scrapping and replacement scenario, purchasing a new electric vehicle qualifies for a subsidy of 12% of the vehicle price, capped at Yuan 20,000, while purchasing a traditional fuel vehicle qualifies for a subsidy of 10% of the vehicle price, capped at Yuan 15,000. Under the trade-in scenario, new electric vehicles qualify for an 8% subsidy, capped at Yuan 15,000, while traditional fuel vehicles qualify for a 6% subsidy, capped at Yuan 13,000.
The new policy mitigates the impacts from the phase-out of vehicle purchase tax exemption.
On January 8, 2026, the Ministry of Finance and the State Taxation Administration of China issued the Announcement on Adjusting Export Tax Rebate Policies for Photovoltaic and Other Products, clarifying that from April 1 to December 31, 2026, the value-added tax (VAT) export rebate rate for battery products would be reduced from 9% to 6%. Starting January 1, 2027, the VAT export rebate for battery products would be eliminated.
This policy adjustment was not a sudden decision. As early as November 15, 2024, relevant authorities had reduced the export rebate rate for photovoltaic and battery products from 13% to 9%. The further elimination of the rebate signifies the government's use of tax policies to guide the new energy industry's transition from "policy-driven" to "market-driven."
The adjustment to the export tax rebate will directly increase export costs for enterprises, squeezing profit margins. Unlike photovoltaic products, which face an immediate elimination of the rebate, battery products enjoy a relatively longer transition period. That is, before April 1, 2026, the rebate remains at 9%; thereafter, it will be reduced to 6%; starting January 1, 2027, the VAT export rebate for battery products will be eliminated.
Based on current battery cell prices of Yuan 0.35-0.4/Wh, costs are expected to rise Yuan 0.03-0.04/Wh after the full elimination of rebate, therefore encouraging Chinese battery companies to accelerate exports. The impact varies across different trade models.
From an enterprise perspective, companies with a higher proportion of overseas business are more affected. Currently, major Chinese battery exporters include CATL, Gotion High-tech, CALB, and REPT. During the grace period, companies are expected to accelerate production scheduling and order deliveries, shifting some overseas demand from 2027 to 2026.
On January 14, 2026, according to overseas news, Tri Winarno, Director-General of Minerals and Coal at Indonesia's Ministry of Energy and Mineral Resources (ESDM), emphasized that the production target for 2026 RKAB would be adjusted based on the capacity of Indonesian nickel smelters. He revealed that the nickel ore production target is expected to be around 250–260 million tonnes. This statement aligns with market expectations and serves as a bullish signal for the market.
As companies with prior approvals can commence mining earlier in the first quarter of 2026, while the 2025 quota concludes within the same period, the market players generally expect production in 2026 to be similar to last year's output of approximately 280-290 million tonnes. This news corresponds to the Indonesian government's further tightening of production targets, which has notably stimulated market sentiment. In the short term, it is further fueling an uptick in market sentiment.
In January, Sina Finance reported that as markets increased bets on Kevin Warsh being nominated as the next Federal Reserve Chair, U.S. Treasury prices fell, and traders scaled back expectations for two Fed rate cuts in 2026. On January 15, 2026, U.S. President Donald Trump announced that he had decided to temporarily refrain from imposing tariffs on rare earths, lithium, and other critical minerals.
In this case, the favorable factors diminished. The cooling of tariff risks will reduce the premiums for critical minerals in the U.S., indirectly slowing the pace of resource digestion.
On January 13, 2026, the Guangzhou Futures Exchange issued a notice adjusting the transaction fees and trading limits for lithium carbonate futures-related contracts. Subsequently, a series of exchange policies have been introduced to optimize risk monitoring and prevention mechanisms, effectively maintaining normal order in the futures market and preventing overwhelming speculative sentiment, helping the prices return to rationality.
However, in the week beginning January 19, 2026, rumor came again that the enhancing environmental protection efforts will potentially impact the mining activities, with the supply concerns resurfacing. Though the rumor is yet to be proved, the market sentiment has turned bullish.
Sources: GFEX, Mysteel
Looking ahead, in January, China's lithium carbonate market is expected to maintain a destocking trend, with energy storage battery production remaining strong during the peak season. In terms of cathode active materials production, the demand for lithium carbonate has weakened slightly in January as leading LFP cathode plants announced production line maintenance, leading to a marginal month-on-month reduction in LFP production. The lithium carbonate supply has similarly been affected by maintenance, resulting in a month-on-month decrease. Therefore, the lithium carbonate market will likely strike a tight balance in January.
On the news front, on January 9, 2026, two government departments announced that the VAT export rebate rate for battery products would be reduced from 9% to 6% between April 1 and December 31, 2026, with the rebate fully eliminated starting January 1, 2027. This is expected to stimulate short-term demand for lithium carbonate, as battery manufacturers are likely to accelerate exports ahead of the 2027 rebate cancellation.
As a result, China's lithium carbonate prices are expected to trend upward in January, with an estimated trading range of Yuan 135,000-180,000/tonne. Going forward, attention should be paid to the resumption progress of Jianxiawo project and operation status of other mining projects, as well as whether lithium iron phosphate plants will implement their announced maintenance plans in January.
For cobalt sulfate, the market activity remained subdued in December 2025. Downstream purchases turned cautious toward year-end, with a focus on inventory digestion, leading to a temporary weakening in demand. However, raw material supply remained tight, and persistently high prices exerted significant cost pressure on cobalt sulfate smelters, keeping quotations firm. The offers for new stocks were generally above Yuan 90,000/tonne, narrowing the price gap between cobalt sulfate produced from different raw materials, though actual transactions during the month were limited.
In January 2026, after inventory digestion, downstream buyers are expected to resume stockpiling, driving cobalt sulfate prices higher under the dual support of high cost and demand recovery. The monthly average price is projected to be around Yuan 94,000-95,000/tonne. And it is important to monitor potential easing in cobalt payables from MHP amid downstream players suffering losses and its impact on cobalt sulfate costs.
In December 2025, China's nickel sulfate prices initially dropped to around Yuan 26,300/tonne on oversupply but rebounded to Yuan 27,300/tonne by month-end, supported by rising nickel prices.
In January 2026, cost support is expected to be the main driver for nickel sulfate price hikes.
On the supply side, new capacities are expected to come online, bringing additional supply. On the demand side, downstream ternary precursor and battery cathode active material producers are likely to see an export rush fueled by the export tax rebate adjustment. Meanwhile, nickel intermediates prices have surged alongside nickel prices, providing robust cost support. The nickel sulfate prices are projected to average Yuan 29,800-30,400/tonne in January.
Source: Mysteel
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Above is a key takeaway from Mysteel Battery Materials Procurement Strategy Report Monthly report. Please contract inquiries@mysteel.com if you are interested in the full report.
Other Mysteel Events:
[Webinar] 2026 Lithium & Nickel: Are We at the Threshold of a New Cycle?
Following a significant price rally recently, this webinar will review China's lithium and nickel battery materials market in 2025, forecast its trajectory for 2026, and evaluate the sustainability of the current growth momentum
Webinar topics:
1. How did China's lithium market perform in 2025, and what drove its stronger-than-expected demand growth?
2. What is the outlook for China's lithium market in 2026 in terms of demand, supply expansion, and price trajectory?
3. Will Indonesia's RKAB policy decide the bottom for nickel prices in 2026?
4. Nickel supply-demand balance in 2026: A slow correction or continued pressure?
5. Will the commissioning of new MHP capacity in 2026 lead to an abundant supply of nickel intermediates?
Date and time: Jan 30, 2026 | 4:00 PM - 5:00 PM (GMT+8, Beijing time)
Platform: Zoom
Language: English
Registration fee: Free
Link: https://zoom.us/webinar/register/4917678670262/WN_-6DiCj26SfmtxoBrFc2KDg
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This Conference will gather industry experts, renowned scholars, manufacturers, end-users, traders, financial clients, and others to foster a high-level dialogue and value-creation platform. Together, we will explore core topics such as macroeconomic trends and policy guidance, shifts in demand-side dynamics, reshaping of supply-side structures, technological frontiers, and material innovations to facilitate industrial development.
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