During the 2026 Chinese New Year holiday, the high-grade nickel pig iron (NPI) and FeNi market entered its traditional off-season, with spot trading essentially at a standstill and price indices holding at pre-holiday levels.
On the cost side, over the Chinese New Year break, Indonesia's Ministry of Energy and Mineral Resources formally confirmed that the total 2026 nickel ore RKAB quota would be controlled within the range of 260-270 million tonnes, a contraction of over 10% from earlier market expectations. More critically, one major mining operation saw its quota slashed by more than 70%, and some mines in the main production areas on Sulawesi Island have yet to pass the MOMS system review.
On the supply side, some Indonesian smelters are experiencing increased actual production efficiency losses due to the continuously declining nickel ore feed grade (now commonly down to 1.4%) . The substantive impact of January's sharp 9.31% month-on-month drop in Indonesian FeNi &NPI production will become fully apparent after post-holiday inventories are drawn down. February production schedules are still expected to show a 2-3% month-on-month decline. Moreover, given the difficulty in replenishing raw material stocks, these production cuts are not active adjustments but are forced by resource constraints. This implies that the post-holiday market will face a reality where the elasticity of supply increases has vanished and the inventory buffer is thin.
In terms of demand, the bearish sentiment stemming from stainless steel mills' February production cuts has been fully priced in by the market. After the holiday, regardless of the strength of end-user orders, rigid restocking demand is unavoidable. This is the key point that could break the pre-holiday deadlock of sluggish transactions.
Written by Cora Ji, jiruyan@mysteel.com
