Nickel prices trended lower last week as high inventories and a persistent market surplus weighed on the metal, according to SunSirs' weekly analysis published on October 20, 2026. As of the end of the week, the spot price for nickel stood at 117,383.33 RMB/ton, down 2.67% from the beginning of the week and 4.14% lower than the same period last year. SunSirs noted that nickel prices have fallen in 9 of the past 12 weeks and risen in 3, with a slight decline in recent sessions.
Macro sentiment remained largely bearish. SunSirs reported that the US Consumer Price Index for September rose 3.7% year-on-year, accelerating from 3.4% previously, with a 9.1% month-on-month surge in gasoline prices accounting for more than half of the increase. The higher-than-expected data reignited market bets on further interest rate hikes by the Federal Reserve, and the US Dollar Index briefly touched an 18-month high.
According to CME data, the probability of an October rate hike peaked at 33.2% before subsequent remarks from Fed officials tempered such expectations. SunSirs said the broader interest-rate environment continues to weigh on non-ferrous metal valuations. Raw material prices also weakened.
In Indonesia, the HMA benchmark price for nickel ore for the second half of October fell to $15,847.67 per tonne, while the premium for saprolite ore dropped to near zero. SunSirs attributed the shift toward buyers in the ore market to increased supply from the Philippines. The delivered-to-plant price for high-grade ferronickel declined to 1,030-1,050 RMB per nickel unit, with steel mills pushing prices toward the 1,000 RMB mark.
FOB prices for MHP (mixed hydroxide precipitate) and high-grade nickel matte continued to fall, according to SunSirs. On the supply side, SunSirs described the trend as one of loose supply, with cost support from the mining sector further weakening. Indonesia's Ministry of Energy and Mineral Resources projects that actual nickel ore production for the full year of 2026 will reach approximately 290 million tonnes, exceeding the upper limit of the 260-270 million tonne RKAB quota.
For the first half of October, the HMA price was lowered to $16,322.67 per tonne, a 2.25% decrease from the second half of September. Premiums for mainstream saprolite ore grades have also turned negative across the board for the first time. The Indonesia Nickel Industry Forum anticipates a 3.5% to 4% year-on-year decline in total processed nickel output for 2026, but expects a significant surge in production capacity by 2027 as HPAL (High-Pressure Acid Leaching) projects ramp up.
Overall demand remained weak, with significant divergence between sectors. In the stainless steel sector, the largest consumer of nickel, steel mills continued to push ferronickel prices down to around 945 RMB per nickel unit, and October stainless steel production schedules are expected to be revised downward. In the new energy sector, SunSirs reported that September production of ternary cathode materials reached approximately 81,300 tonnes, down about 10.7% from August, while ternary precursor production fell 7.8% to approximately 89,100 tonnes.
Nevertheless, end-user demand for ternary batteries has shown resilience, and demand for nickel in this segment has continued to grow year-on-year. SunSirs also noted a divergence between pure nickel and nickel salts: battery-grade nickel has remained relatively insulated from spot volatility due to long-term fixed-price contracts, with the price of nickel chloride holding steady. Inventory pressure continues to mount.
As of October 16, nickel warrants on the Shanghai Futures Exchange (SHFE) had risen to 94,036 tonnes, a significant week-on-week accumulation. LME nickel inventories saw a slight decline but remain elevated, exceeding 280,000 tonnes. Domestic social inventories of nickel cathode stood at approximately 122,900 tonnes, a marginal week-on-week reduction of 602 tonnes, which SunSirs described as still high.
On October 13, the International Nickel Study Group (INSG) revised its outlook for the 2026 global primary nickel market, shifting from an April forecast of a 32,000-tonne deficit to a projected surplus of 19,000 tonnes. The group also anticipates a surplus of 70,000 tonnes for 2027. Separately, SunSirs reported that Indonesia's Ministry of Energy and Mineral Resources may tighten restrictions on new capacity for semi-finished nickel smelting projects and will accelerate the review of 2027 RKAB (mining work plan and budget) approvals.
SunSirs flagged policy uncertainty as a key factor to monitor. In its market outlook, SunSirs said nickel prices continued their downward trend last week, driven by three bearish factors: stronger-than-expected US inflation that fueled rate hike expectations and a stronger dollar; the continued release of ore quotas from Indonesia, which lowered ore prices and weakened cost support; and downward pressure from the stainless steel sector alongside reduced production schedules for ternary battery materials. Nickel prices have fallen below the cash cost level of approximately 118,776 RMB/ton.
SunSirs noted that widespread losses across the smelting sector may limit further downside, but high inventory levels and a persistent market surplus continue to constrain any rebound. Nickel prices are therefore expected to remain weak and fluctuate at low levels in the near term. Source: SunSirs, 'High Inventories and a Surplus-Driven Landscape: Nickel Prices Trended Lower Last Week', October 20, 2026.
SunSirs attributes data to its own price monitoring, the CME, Indonesia's Ministry of Energy and Mineral Resources, the Indonesia Nickel Industry Forum, the International Nickel Study Group and the Shanghai Futures Exchange and LME inventory data as cited in the report.
Source: sunsirs.com