Steel producers and buyers are closely monitoring nickel prices after a spike in values threatened to become a key driver of stainless price increases in the opening months of 2026.
Closing prices for three-month contracts on the LME show that nickel prices rose from their 2025 holding pattern around USD15,000 per tonne in mid-December. Nickel prices bottomed at USD14,263 per tonne on December 16, close to a five-year low recorded in April 2025. Values accelerated in the second half of December last year, however, peaking at USD18,756 per tonne on January 23.
The price of various ferrous and non-ferrous metals increased in January amid an uptick in investor activity. The price of nickel initially increased on speculation that 2026 mining quotas would be cut in Indonesia, the world’s largest producer of nickel. Indonesia’s share of the global nickel production is around 60% – up from 31.5% in 2020. On December 19, Indonesia’s Ministry of Energy and Mineral Resources confirmed plans to reduce the country’s annual nickel ore production quotas, by around a third, to 250-260 million tonnes. These changes are subject to final approval in March.
MEPS respondents say that the Indonesian government wants to curb the output of ore in an effort to maintain nickel prices at around USD17,000 per tonne. Its aim is to better balance ore supply with the demands of domestic smelters, while supporting the profit margins of companies in the sector. However, stainless steel market participants in various countries surveyed for this report expressed doubts over the sustainability of January’s nickel price increases.
The global oversupply of nickel was estimated at almost 200,000 tonnes for 2025 and is expected to remain at a similar level this year. At the start of January, LME inventories of class one nickel stood at a little over 255,000 tonnes. That volume had already grown to more than 285,000 tonnes at the time of this review’s publication. Consequently, oversupply is expected to undermine any support to prices provided by Indonesia’s planned nickel ore mining cuts.
Emissions considerations shift procurement priorities
Market participants in Europe expect Asian steelmakers’ procurement priorities to shift in 2026, potentially raising demand for the class one nickel traded via the LME. The implementation of the European Commission’s Carbon Border Adjustment Mechanism (CBAM), from January 1, has sharpened mills’ focus on the embedded emissions of their raw material inputs. Consequently, producers targeting exports to Europe will shun emissions-intensive nickel pig iron in favour of cleaner class one inputs.
The effect of this trend may be delayed by the European Commission’s verification of overseas mills’ actual carbon emissions. Unless that assessment process is completed by September 2027, when CBAM taxes are due, producers exporting to the EU will have to use the bloc’s less favourable country-specific default emissions values. These will not take into account steelmakers’ actual emissions, including those of raw material inputs, likely resulting in elevated CBAM taxes.
The effects of January’s nickel price spike on stainless steel prices will be felt in the near term, however, as mills seek to recoup their increased input costs. Buyers in the United States will feel the effect in February’s alloy surcharges. North American Stainless has announced a rise of USD252 per tonne on its surcharges for grade 304 coil and bars, alongside increases of USD390 and USD405 per tonne on grade 316 coil and bars, respectively.
However, MEPS’s raw materials price forecasts, featured at the end of this report, indicate that the increased nickel costs reflected in those prices will not be maintained at the same elevated level in the longer term.
