Nickel prices on the London Metal Exchange surged as much as 2.6% to $19,050 a ton, according to Bloomberg, after Shanghai Metals Market reported that upwards of 15% of high-grade nickel pig iron capacity at Indonesia's Weda Bay Industrial Park will undergo rotational maintenance in the coming months.
The Weda Bay Industrial Park is one of the world's most critical nickel-processing hubs, housing a large cluster of smelters that produce nickel pig iron — a key input for stainless steel production. The facility's significance extends beyond steel, as nickel is a vital metal for electrification and data center infrastructure.
Indonesia dominates global nickel supply, producing 2.6 million metric tons in 2025 out of a global total of 3.9 million tons, accounting for roughly two-thirds of worldwide mine production. The latest output reduction builds on existing cuts in March and April driven by lower ore supplies and high costs.
The supply concerns have easily sparked fresh buying interest on the LME, pushing prices to their highest levels in recent sessions. The maintenance is expected to reduce NPI output by 10% to 15% from the park in the coming months.
Market participants are now watching for signs of further tightening, as Indonesia's dominant position means any disruption there can ripple through global supply chains. Stainless steel producers and battery manufacturers could face increased input costs if the maintenance extends longer than anticipated.
Some analysts caution that the price spike may be overdone, noting that the maintenance is rotational and temporary. They argue that Indonesia's vast production capacity could quickly compensate once operations normalize, potentially capping further upside.