Mid-year production quotas and underwhelming NCM demand weaken market fundamentals: Q3 2026 Nickel Price Review
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The strength of nickel prices seen in Q2 reversed this quarter amidst softening demand and the resumption of nickel exports from the DRC.
Benchmark's data shows that nickel sulphate prices (EXW China) fell 13% since the end of Q2 to RMB 28,500/tonne ($4,247) as of 23 September. During the same period, aggregate CIF Asia MHP prices declined 17.3% whilst metal prices (EXW Europe) fell 9.5%.
“Easing cost pressures at Indonesian refiners and smelters, alongside fresh production quotas and weakening nickel-based cathode demand, have offered little support to nickel prices during Q3,” said Frederick Bloomfield, senior analyst at Benchmark.
Why did nickel sulphate prices fall through Q3?
Q3 reversed the strength of Q2, which had been supported by constrained supply. Nickel sulphate prices eased on softening demand, lower raw material prices, and undercutting by recycled material. Thin liquidity led to Chinese suppliers lowering offers to offload material.
Demand underwhelmed in Q3 as EV sales underperformed expectations, and the market continued to shift from nickel-based cathode chemistries to the increasingly dominant LFP. This resulted in major players like CATL curtailing NCM cell production and NCM CAM orders towards the end of the quarter. Precursor and cathode producers continued to rely primarily on long-term contract volumes and internal stockpiles, keeping spot sulphate liquidity thin.
Indonesian-origin cobalt-containing intermediates like mixed hydroxide precipitate (MHP) were also subject to falling buying interest following the resumption in cobalt shipments from the DRC in August, leading to lowered bids from MHP buyers. By 23 September, aggregate CIF Asia MHP prices had declined 17.3% over the quarter, from USD $9,045/tonne to $7,484/tonne, in part due to Ni Payables slipping from 93.5% to 88.5%.
In the seaborne Asia market, CIF Asia nickel sulphate premiums over the LME remained relatively stable throughout Q3, between $1,700–1,750/tonne, as most material continued to be delivered under contract.
How did cost levels at Indonesian players shift?
In mid-July, Indonesia's Ministry of Energy and Mineral Resources ruled out a major upward revision to the 2026 RKAB mining quota, confirming the approved range would remain close to 260–270Mwmt, rather than the 300–360Mwmt some market participants had anticipated. In spite of this, mid-year production quotas were released throughout Q3, bringing assets like Eramet and Tsinghsan’s Weda Bay back online, easing cost pressures and mitigating some of the concerns around acute quota-driven scarcity that had buoyed H1 pricing.
Cost pressures eased further when a revised HPM ore pricing formula took effect on 15 September, cutting benchmark prices sharply for lower-grade ore. This reduced feedstock costs for refiners processing lower-grade laterite, adding to the quarter's downward price pressure just as MHP payables were already softening. Furthermore, improved availability of sulphur as tensions cooled in the Middle East, improved the balance sheets of Indonesian RKAB players.
LME nickel metal prices also retreated throughout the quarter as investors responded to softening Indonesian supply restrictions as well as mounting visible inventories on the LME and SHFE exchanges.
What could affect nickel prices in Q4?
Looking to Q4 2026, there remains a risk of renewed disruption at the Strait of Hormuz, which would quickly reverse Q3's cost relief for Indonesian HPAL operators. Furthermore, ongoing El Niño-related droughts in Indonesia are causing concern amongst HPAL and RKEF operators in the region, with some suggesting it could impact up to 30–40% of supply.
Benchmark is also keeping close tabs on the pipeline of MHP production scheduled to come online in the upcoming months and the impact this may have on a tight market. The extent to which the renewed HPM ore pricing formulae are adopted, the potential for NCM demand recovery, and nickel metal inventory buildup are also key areas that will shape market conditions in Q4.
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