Indonesia and Philippines Reshape Nickel Market Through Coordinated Supply Discipline

• Nickel prices surged nearly 5% to over $18,000 per ton as Chinese markets return from New Year, with physical market fundamentals supporting the exchange price movements and Philippine ore prices increasing significantly.
• Indonesia cut Eramet's ore quota from 42 million to 12 million tons (representing approximately 300,000 tons of nickel or 10% of global supply), signalling aggressive supply management by the Indonesian government.
• Indonesia and the Philippines established the IndoPhil Nickel Corridor working group to coordinate mining activities, moving toward cartel-like behavior to improve pricing power for the world's top two ore suppliers.
• Vale sold its Thompson nickel asset to Canadian group Exiro Minerals with backing from Orion Resource Partners and the Canada Growth Fund, potentially reviving production that declined from 40,000 to 10,000 tons annually.
• Multiple junior nickel companies successfully raised capital in early 2026, suggesting improved market sentiment after a difficult 2025 fundraising environment.

The nickel market is experiencing a notable price recovery supported by fundamental supply constraints rather than speculative trading. Mark Selby discusses several developments pointing to a structurally tighter market environment that could sustain higher prices through the first quarter of 2026 and beyond.

Price Movement and Market Fundamentals

Nickel prices broke above $18,000 per ton in late February 2026, representing a nearly 5% single-day gain. This movement is particularly significant given its timing immediately following Chinese New Year, when Asian markets traditionally experience reduced activity. The price had consolidated in a range between $16,500 and $18,000 per ton for the previous three weeks before the breakout.

^{Trading Economics - 25/02/2026 - https://tradingeconomics.com/commodity/nickel}

According to Selby, the sustainability of this price movement is supported by follow-through in physical markets. While exchange-traded prices can move based on speculation, confirmation from physically traded private markets indicates genuine fundamental tightening. Selby noted that physical market indicators have "ground up another dollar or two higher" despite the typical slowdown during Chinese New Year, suggesting robust underlying demand and constrained supply.

Philippine ore prices to Indonesia have increased notably, which Selby identifies as the "swing volume" in the market. The Philippine rainy season, which runs through March, typically constrains ore availability and should support prices at the upper end of the $18,500 to $20,000 range by the end of the first quarter.

Indonesian Supply Management Creates Market Impact

The most significant development affecting market structure involves aggressive quota reductions by the Indonesian government. Eramet, which operates one of the world's largest nickel mines producing over 10% of global nickel supply, had its ore quota slashed from 42 million tons to 12 million tons. This 30 million ton reduction translates to approximately 300,000 tons of nickel, representing roughly 10% of global supply.

Selby suggested this action may not be coincidental, noting that publicly reporting Western companies must disclose such quota cuts while reductions affecting 30 private Indonesian mining companies would not appear in public markets. He also raised questions about whether Western companies have navigated local business practices appropriately compared to domestic competitors.

The quota reduction affects ore supply to a plant built specifically at Weda Bay, making the impact particularly concentrated. While Eramet will likely recover some of the quota over time, the action demonstrates Indonesia's commitment to managing supply to support higher prices.

Regional Coordination Through Indo Nickel Corridor

Indonesia and the Philippines have formalised cooperation through the IndoPhil Nickel Corridor, a working group established between the mining associations of both countries. The Philippines is the world's second-largest nickel supplier with production exceeding 300,000 tons annually and serves as the other major ore supplier in the region alongside Indonesia.

While not formally constituted as a cartel, the working group represents coordination between the two dominant ore suppliers. Selby revealed that Indonesia explicitly approached Canada about joining such an organisation during G20 meetings three or four years ago, indicating long-standing intent to organise producer cooperation.

The working group aims to coordinate activities so producers can "make some money in this business rather than just produce it in a way that no one's getting any value from this limited resource." This represents a shift toward supply discipline that could fundamentally alter market dynamics.

Supply Disruptions and Asset Transactions

Sherritt International announced operational curtailments at its Moa Bay operation in Cuba due to fuel shortages affecting the country. While the Canadian refinery has approximately two months of inventory to continue operations, the disruption removes about 1% of global supply. Though relatively small, this adds to marginal tightness in the market.

On the positive side, Vale completed the sale of its Thompson nickel asset to Exiro, a Canadian group with funding support from Orion Resource Partners and the Canada Growth Fund. The asset has been underinvested for years, declining from 40,000 tons of annual nickel production under Inco in 2006 to just 10,000 tons recently. The new ownership has committed to invest several hundred million dollars, potentially reversing the production decline.

Carbon Capture Technology Development

Canada Nickel Company announced successful testing of CO2 injection technology developed with the University of Texas at Austin through a U.S. Department of Energy ARPA grant. The technology involves pumping CO2 directly into ultramafic rock before mining, which carbonates the rock, makes it more fractured, and reduces energy requirements for blasting and grinding.

This development creates optionality for Canada Nickel's 20 deposits in the Timmins Nickel District. Less economic deposits could potentially be used for carbon capture and storage, generating revenue streams beyond mining operations. Selby positioned this as part of creating a "net zero industrial cluster" in the region.

While current financial benefits are limited under Ontario's provincial carbon credit scheme, the technology could enable significant revenue if sold to technology companies seeking carbon removal credits, similar to the CarbFix project in Iceland.

Magna Mining Operational Update

Magna Mining released 2026 guidance showing all-in sustaining cash costs of $5.00 to $5.60 per pound of copper equivalent, including precious metal streaming payments. This includes approximately one dollar per pound in sustaining costs with production guidance of 16 to 18 million pounds of copper.

The company reported its first reserve at McCreedy West of approximately one million tons grading 1.5% copper with nearly three grams of precious metals, plus nickel and silver credits. At Levack Footwall, exploration drilling returned high-grade intervals ranging from 18% to 24% copper with 5 to 10 grams of precious metals, though over relatively narrow widths of 1.5 to 7 meters.

Selby cautioned that while high grades generate market attention, the economics depend on the volume of high-grade material and the cost required to extract it. The precious metal streaming payments, likely originating from a deal approximately 20 years ago when the assets were held by FNX and Gold Wheaton, represent an ongoing cost consideration.

Key Takeaways

The nickel market appears to be entering a period of structural tightening driven by coordinated supply management from Indonesia and the Philippines rather than cyclical demand fluctuations. Indonesian quota reductions removing 10% of global supply, combined with the establishment of the IndoPhil Nickel Corridor for regional coordination, represent fundamental shifts in market structure. Physical market indicators are confirming exchange price movements, suggesting the rally is based on genuine supply-demand fundamentals. The ability of junior companies to raise capital and transactions like the Thompson asset sale indicate improving sentiment across the sector. For investors, these developments suggest a potentially sustained period of higher nickel prices supported by supply discipline rather than temporary disruptions.

TL;DR

Indonesian quota cuts removed 10% of global nickel supply while Indonesia and the Philippines established coordination through the Indo Nickel Corridor, fundamentally tightening market structure. Physical market indicators confirm exchange price movements above $18,000/ton are driven by genuine supply constraints rather than speculation. Junior company financings and asset transactions signal improving investor sentiment across the nickel sector.

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