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.

Macquarie Near-Term Copper Outlook Stays Firm Despite Weak Physical Signals

Copper

Macquarie near-term copper outlook remains firm even as physical signals look softer. The bank raised its first-quarter copper forecast to $12,900/t and its second-quarter view to $12,500/t. It said speculative positioning and macro sentiment still dominate price action. As a result, Macquarie near-term copper outlook now points to continued volatility rather than a clean correction.

This view matters because physical fundamentals are not especially tight. Macquarie estimates the global copper market was in a 550,000-650,000t surplus in 2025. Visible inventories are also rising across major exchanges. Therefore, copper price volatility is being driven more by financial flows than by immediate supply stress.

The market backdrop reflects that disconnect clearly. LME copper rebounded toward $13,000/t after falling from a record above $14,500/t. The sell-off removed some excess positioning, but broad liquidation never followed. Consequently, Macquarie near-term copper outlook suggests dip-buying is still supporting prices.

Copper Price Volatility Is Overriding Loose Nearby Fundamentals

Copper price volatility is now the main story in the near-term market. Spot premiums in Europe and China are under pressure, while the forward curve has moved into contango. That usually signals weaker prompt tightness and better nearby availability. However, prices remain elevated because financial participation is still strong.

High outright prices are also affecting real demand. Fabricators and other end users have stayed cautious at these levels. Some consumers returned during the recent pullback, but buying remains selective. Therefore, the physical market still looks softer than headline copper prices suggest.

Macquarie does not expect a sustained price collapse without a major macro shock. The bank believes downside risks have eased after the recent correction. Meanwhile, longer-term support from electrification, grid investment, and energy transition spen

ding remains intact. As a result, LME copper surplus conditions may coexist with high prices for longer than many expected.

Lithium Price Outlook Also Turns More Bullish Near Term

Lithium price outlook also improved sharply in Macquarie’s latest update. The bank nearly doubled its near-term lithium forecasts, citing tighter early-2026 supply conditions. Strong energy storage demand and delayed new supply supported that change. Consequently, lithium now joins copper in showing stronger near-term pricing than earlier forecasts implied.

Macquarie still expects lithium tightness to ease later in the year as supply responds. That means the bank is not calling for an open-ended rally. However, it does believe current fundamentals justify a higher price floor in the near term. Therefore, lithium price outlook now looks firmer even if later conditions soften.

The broader message is important for metals markets. Copper and lithium are both trading in an environment where financial drivers remain powerful. Physical fundamentals still matter, but they are not the only force shaping prices. The market now has to price sentiment, positioning, and macro risk alongside real supply-demand balances.

The Metalnomist Commentary

Macquarie’s update reinforces a key market truth. Prices can stay high even when nearby physical signals weaken, as long as financial conviction remains strong. Copper and lithium both now sit in that uncomfortable zone where fundamentals matter, but timing is being set by money flow.

Zinc Prices Set to Drop in 2025 Due to Increased Supply and Weak Demand

McArthur River Mining

Zinc prices are expected to decline in 2025, as global supply improves and demand remains subdued in key consumption sectors, particularly in the construction and automotive industries. This shift comes after a strong price performance in 2024, driven by tight supply conditions and mining disruptions.

Price Performance in 2024

Zinc has been one of the standout performers on the London Metal Exchange (LME) in 2024, with prices hovering above $3,000 per ton in December, compared to $2,537 per ton in January. This 6% increase from the previous year can be largely attributed to supply disruptions at key mines. Notable interruptions included Glencore's McArthur River mine in Australia, which halted operations in March due to extreme rainfall, and MMG’s Dugald River mine in China, which was placed on care and maintenance during Q3.

The zinc market faced a 164,000-ton deficit in 2024, primarily due to reduced production from mines like Boliden's Tara mine in Ireland and Almina's Aljustrel mine in Portugal. However, supply conditions are expected to shift in 2025, leading to a bearish outlook for zinc prices.

Improved Supply Forecast for 2025

The International Lead and Zinc Study Group (ILZSG) forecasts a surplus of 148,000 tons in 2025 as new mines and production ramps up globally. One major development contributing to this surplus is the reopening of Ivanhoe Mines' Kipushi mine in the Democratic Republic of Congo, which is expected to produce 278,000 tons per year over its first five years. Kipushi will become Africa's largest zinc mine and the fourth-largest globally.

In addition, European production is expected to rise, with increased output from Bosnia and Herzegovina, Portugal, and the reopening of Tara operations in Ireland. Russia's zinc production is also set to grow, supported by the newly opened Ozerneoye plant. Other key regions, including Australia, Canada, China, Japan, the Netherlands, and Norway, are expected to see increased concentrate supply, especially in the first quarter of 2025. According to trading firm Macquarie, global mined supply is projected to grow by 5.8% in 2025, with around 570,000 tons of zinc in new project approvals.

Weak Demand Pressures Zinc Prices

While supply is set to increase, demand growth for zinc is expected to remain weak, especially in the construction and automotive sectors, which together account for a significant portion of global zinc consumption. Carbon steel demand has fallen in 2024, driven by weakness in the construction sector, particularly in China. European manufacturing also remains sluggish, with the automobile sector facing significant challenges. Volkswagen, for instance, has announced plans to close several plants and lay off thousands of employees in response to falling sales and weak demand for cars.

Macquarie predicts a modest 1.7% growth in global refined zinc demand in 2025, a revision down from the previously anticipated 2.5% growth rate. The uncertainty surrounding potential new U.S. tariffs under President-elect Donald Trump's administration adds another layer of risk, particularly regarding the strength of the U.S. dollar and global trade dynamics.

Zinc Price Outlook for 2025

Given the expected supply surplus and the persistent demand lag, analysts are generally bearish on zinc prices for 2025. The World Bank and Fitch Ratings expect zinc prices to average $2,600 per ton in 2025, with further declines to $2,500 per ton by 2026. Macquarie is similarly forecasting a drop to $2,650 per ton in 2025, followed by a decline to $2,450 per ton in 2026. These price drops reflect the anticipated market surplus and continued weak demand.

Conclusion

As zinc supply increases and demand struggles to pick up, the market is expected to experience price declines in 2025. The key factors driving this change include the reopening of major mines, such as Kipushi, and continued challenges in major zinc-consuming sectors like construction and automotive manufacturing. While supply-side factors are positive, weak demand and potential trade uncertainties are expected to put downward pressure on zinc prices in the years to come.

US-China critical minerals trade masks big strategic risks

US-China Critical minerals

The US-China critical minerals trade looks small in dollar terms but carries outsized strategic risks for key industries. The US-China critical minerals trade was worth just $2bn in 2024, only 3pc of US critical mineral imports. However, the US-China critical minerals trade underpins defence, high-tech manufacturing and energy systems that generate trillions in economic value.

Small trade volumes, large exposure to China

Macquarie research shows US critical mineral imports totalled $65bn in 2024 under the new 60-mineral list. Bulk materials like aluminium, copper and PGMs dominate the import bill and come mainly from partners such as Canada and Chile. By contrast, China supplied only $2bn, far below Canada’s $21bn or Chile’s $6.6bn.

However, China’s leverage rests in concentration, not value. It controls about 70pc of global rare earth mining and 90pc of processing. As a result, even small tonnages of Chinese exports can be mission-critical for US defence and advanced manufacturing. Any targeted export controls could therefore disrupt high-value supply chains well beyond the trade numbers.

Export controls could hit US GDP and strategic sectors

Macquarie estimates Chinese export controls on select minerals could each cut US GDP by more than $1bn in a year. Samarium restrictions show the highest impact, at an estimated $4.5bn loss, because of its critical role in defence. Meanwhile, curbs on lutetium could shave $2.1bn from GDP, mainly affecting refineries and semiconductor producers.

Controls on terbium, dysprosium and gallium would similarly reverberate across magnets, EV motors, wind turbines and high-frequency electronics. Therefore the economic risk from the US-China critical minerals trade lies in concentrated choke points, not headline trade flows. That reality is now shaping US industrial policy, stockpiling strategies and onshoring of processing capacity.

The Metalnomist Commentary

This analysis reinforces why Washington treats rare earths and related metals as strategic assets, not simple commodities. Even modest Chinese export controls could ripple through defence, semiconductor and energy transition value chains. Expect continued moves by the US and allies to diversify sourcing, build domestic refining and expand recycling to reduce this asymmetric exposure.

MHP and Nickel Sulphate Fuel Significant Growth in Indonesia's Nickel Exports

Indonesia has experienced a substantial increase in nickel exports during the first half of 2024, driven by a sharp rise in production capacities for mixed hydroxide precipitate (MHP) and nickel sulphate. According to research conducted by Australian bank Macquarie, Indonesia's total nickel exports reached 805,000 tonnes between January and June, reflecting a 20.7% year-on-year increase. When including stainless steel, total exports rose by 22% to 998,000 tonnes.

The growth in exports is largely attributed to the country's four high-pressure acid leach (HPAL) plants, which exported a combined 139,000 tonnes of nickel metal in the form of MHP and nickel sulphate during the first half of the year, a staggering 106% increase from the same period in 2023. The second quarter alone saw 81,000 tonnes exported. Specifically, nickel sulphate exports skyrocketed from 5,400 tonnes in the first half of 2023 to 85,400 tonnes in 2024, equivalent to 19,000 tonnes of nickel metal. Meanwhile, MHP exports grew by 80% year-on-year to 120,000 tonnes.

Nickel pig iron (NPI) remains Indonesia's largest nickel export by volume, growing by 13% year-on-year to 544,000 tonnes in the first half of 2024. However, the slower growth in NPI exports compared to MHP and nickel sulphate suggests Indonesia's increasing focus on the battery materials sector.

Despite the overall rise in exports, high-grade matte exports from Indonesia declined by 17.8% to 101,000 tonnes as more of this supply was utilized domestically for nickel metal production.

Macquarie's data also indicates that nickel ore exports increased in the second quarter of 2024, with Indonesia importing 900,000 wet metric tonnes (wmt) of nickel ore from the Philippines in June, up from 200,000 wmt in March. This increase reflects ongoing tightness in domestic supply despite the government's accelerated approval of mining quotas.

Interestingly, NPI exports to China declined in the first half of the year, with China's share of Indonesian NPI exports dropping to 74% in June, the lowest since the first quarter of 2022. Instead, more NPI is being exported to India and Europe due to cost advantages.

Additionally, Indonesian stainless steel production surged by 25% year-on-year in the first half of 2024, reversing the declines of 4% and 9% seen in 2022 and 2023, respectively.

Australia's Liontown Meets Lithium Output Target Amid Market Challenges

Australian lithium producer Liontown Resources has achieved a significant milestone by producing its first spodumene concentrate from the Kathleen Valley project, meeting its mid-2024 goal despite earlier financial difficulties. The first shipment of spodumene concentrate is scheduled for later in the current quarter (July-September), according to an announcement on July 31.

Liontown recently secured a short-term 10-month offtake agreement with Beijing Sinomine International Trade. Additionally, long-term contracts with major auto manufacturers and battery producers such as Tesla, LG Energy Solution, and Ford are expected to commence as the Kathleen Valley project reaches full production capacity over the next year.

The Kathleen Valley project is ramping up to a capacity of 3 million tons per year, a target anticipated by the end of the first quarter of 2025. Liontown also plans to expand this capacity to 4 million tons per year. The company’s funding deal with LG Energy Solution will facilitate early works to "preserve" the expansion option with a timeline set for 2027.

This new supply of lithium from Liontown comes amid a market downturn with ongoing concerns about oversupply. Australian financial services firm Macquarie has projected a potential slowdown in the pace of Australian production growth due to unencouraging price conditions.

In a related development, US lithium producer Albemarle announced on July 31 a halt to the construction of train 3 at its Kemerton lithium conversion facility in Western Australia, citing "ongoing industry headwinds" as part of a comprehensive review of its cost and operating structure. Each train at the facility has a processing capacity of 25,000 tons per year of lithium hydroxide. Albemarle will also place train 2 into care and maintenance while focusing on increasing production from train 1.

Commenting on Albemarle’s decision, Australia’s federal resources minister Madeleine King urged bipartisan support for the country's critical minerals and rare earths industry. King also called on political opposition parties to support Australia’s critical minerals production tax incentive to bolster local industry and jobs.

54% of the World's Copper Mines Face 'Drought Shock'

Anglo American Copper Mining

More than half of the world’s copper mines are exposed to 'drought risk'. Other major metal raw materials such as iron ore, lithium, and cobalt are also facing potential supply disruptions due to abnormal weather conditions.

Metalnomist stated in a report published on the 24th, “Climate anomalies caused by global warming will adversely affect the supply and demand of international raw materials.” The center cited data from the global consulting firm PricewaterhouseCoopers (PwC), predicting that by 2050, 54% of the world's copper mines and 74% of lithium and cobalt mines will experience reduced production due to drought. Water is essential for crushing mineral ores, separating impurities, and cleaning equipment. McKinsey highlighted that “copper, gold, iron ore, and zinc are particularly vulnerable to drought, as 30-50% of these mines are located in areas with insufficient water resources.”

Chile, which produced over 30% of the world's copper in 2020, is already suffering from severe drought. Chilean state-owned mining company Codelco produced only 1,325,000 tons of copper last year, the lowest in 25 years, due to water shortages and other impacts.

15 Years of Water Shortage in the World’s Largest Copper Reserve: "If Mining Halts, Prices Could Quadruple"

Metalnomist warned on the 24th, “Mining items heavily dependent on production from specific countries are at risk of global supply disruptions due to abnormal weather conditions.”

According to Metalnomist, 47% of the world's copper reserves are concentrated in three countries : Chile, Peru, and the Congo. 74% of iron ore is concentrated in China, Australia, and Brazil, while 80.8% of bauxite is concentrated in Guinea, China, and Brazil. Copper demand has recently surged due to the AI boom, raising concerns that any supply disruption could significantly impact the industry. Global infrastructure asset manager Macquarie Group predicts that the annual copper demand could increase by 2 million tons by 2030 due to the surge in AI data centers. Copper is crucial for the construction of both data centers and power grids.

Northern Antofagasta, Chile's largest copper and lithium deposit, is a prime example of a region unable to increase production due to water shortages. Reuters recently reported that local mining company Antofagasta PLC has been struggling to secure water supply as reservoirs have dried up due to a 15-year-long drought. In the first quarter of this year, Antofagasta PLC’s copper production decreased by 11% compared to the same period last year.

Limited water resources are also causing conflicts with local communities. Antofagasta PLC and Australian mining company BHP were sued by Chile’s National Defense Commission (CDE) in 2022 for environmental pollution. The CDE claimed that mining companies extracted water volumes exceeding regulations, causing severe damage to the local ecosystem and indigenous communities.

Seawater desalination plants are being considered as a solution to these issues. However, the high investment costs and long construction periods limit their ability to solve water problems immediately.

Due to structural constraints on copper supply, it is predicted that copper prices could skyrocket in the coming years. Goldman Sachs projected that the average copper price next year would be $15,000 per ton. Pierre Andurand, founder of hedge fund Andurand Capital, analyzed that the global copper supply shortage could drive prices up to $40,000 per ton by 2028. Copper traded at a record high of $10,857 per ton on the London Metal Exchange (LME) on the 21st of last month, before falling to $9,563 on the 21st of this month.

The increasing demand for electricity for cooling due to heatwaves is also expected to raise the demand for fossil fuels such as coal and natural gas. Metalnomist noted, “Europe is in a situation where it is inevitable to expand thermal power generation to meet the increasing electricity demand in summer,” and added, “In Asian countries such as Thailand, India, and Bangladesh, the demand for natural gas for power generation has increased.”