Macquarie Nickel Price Outlook Turns More Bullish on Indonesia Ore Tightness

Macquarie

Macquarie nickel price outlook has turned more constructive for 2026. The bank lifted its LME nickel forecast to $17,750/t from about $15,000/t. It argues that Indonesia ore tightness is slowing supply growth after years of surplus. As a result, Macquarie nickel price outlook now points to a firmer market floor.

This change matters because Indonesia has driven most global nickel growth in recent years. Rapid expansion in smelting and HPAL capacity pushed refined output well ahead of demand. However, tighter mining quotas and rising domestic ore prices are now changing that pattern. Therefore, the nickel market balance is starting to look less loose.

Indonesia Ore Tightness Is Reshaping the Supply Story

Indonesia ore tightness is becoming the key issue in the global nickel market. Macquarie expects lower mining quotas in 2026 to constrain laterite feedstock for smelters and HPAL projects. That will likely slow refined nickel output growth even as downstream capacity still expands. Consequently, upstream limits are beginning to matter more than downstream ambition.

This shift could also reduce the pace of stock builds. Macquarie expects exchange inventories and producer stocks to stabilize rather than keep rising sharply. That would remove part of the pressure that has weighed on nickel prices. As a result, the market may start pricing scarcity risk more seriously.

Macquarie now sees the 2026 surplus at only 89,000t, down from its earlier 250,000t view. It also expects global nickel supply to dip slightly this year. That is a major change from the 10pc supply growth seen in 2025. Therefore, the nickel market balance looks materially tighter than before.

Stainless Steel Demand Still Anchors the Market

Stainless steel demand remains the strongest pillar of nickel consumption. Macquarie expects stainless production to rise 4.4pc to 67mn t in 2026. That should keep underlying nickel demand firm even as battery chemistry trends become more mixed. Consequently, stainless steel continues to anchor the nickel demand profile.

Battery demand is still growing, but not explosively. Lower-nickel chemistries such as LFP have reduced expectations for EV-related nickel intensity. Even so, Macquarie still expects nickel use in batteries to rise 5pc to 542,000t in 2026. Therefore, battery demand is still supportive, just less dominant than some expected.

This demand mix gives the market a more diversified foundation. Stainless steel provides steady volume support, while batteries still add incremental growth. That combination is healthier than relying on one major demand theme alone. As a result, Macquarie nickel price outlook reflects stronger balance on both sides of the market.

Higher Prices May Be Needed to Sustain Non-Indonesian Supply

Higher nickel prices may now be necessary to keep non-Indonesian supply alive. Macquarie said many producers outside Indonesia remain under margin pressure near or below $15,000/t. Some may need $18,000-19,000/t to operate profitably and justify reinvestment. Therefore, a higher LME nickel forecast also reflects a higher incentive price.

Indonesia still remains the lowest-cost producer on average. However, its cost advantage is narrowing as ore gets more expensive and regulations tighten. That reduces the chance of another unchecked supply wave. Consequently, the market may be moving away from chronic oversupply and toward more managed growth.

The Metalnomist Commentary

Macquarie’s upgrade matters because it reframes nickel from an oversupply story into an upstream constraint story. The biggest change is not demand. It is that Indonesia may no longer be able to expand ore and refined supply without friction. If that holds, nickel prices may stay firmer than the market has been used to.