The Zhitong Finance App learned that according to the latest analysis data from Macquarie Group Ltd. (Macquarie Group Ltd.), the potential reduction in Indonesian nickel production may reduce the global market supply scale by more than one-third (Macquarie estimates that the scale of nickel ore supply reduction is about 35%), thus bringing an extremely significant upward stimulus effect on nickel metal prices, which have continued to be weak since 2023. Catalyzed by large-scale oversupply, lithium, nickel and cobalt, the three major battery metals have continued to plummet since 2023. Extremely strict restrictions on supply-side production capacity will be the core factor determining the complete reversal of battery metal prices in 2025.

According to several media reports last month, senior Indonesian government officials are considering a drastic reduction in nickel quotas, from 0.272 billion tons in 2024 to about 0.15 billion tons this year. This will be about 40% lower than Macquarie's basic forecast, and will eventually lead to a sharp drop in the production of this battery metal, which in turn will boost nickel prices, which have plummeted sharply since 2023 due to oversupply.

According to LME (London Metal Exchange) metal trading prices, nickel prices have plummeted by more than 85% since the beginning of 2023, which can be called a slump. Currently, it is hovering around 15,455 US dollars/ton, and as a comparison, the nickel price at the end of 2022 is hovering around 29,880 US dollars/ton.

Indonesia (Indonesia) remains the world's largest supplier of nickel ore. According to data from the US Geological Survey (USGS), in 2022, Indonesia's nickel reserves account for about 20.6% of the world's total reserves, ranking first in the world. In terms of production, Indonesia's nickel production reached 1.6 million tons in 2022, accounting for 48.8% of the world's total production.

Macquarie analysts believe that the possibility of large-scale production cuts such as the above is extremely low, but they point out that nickel ore exports from the world's largest nickel producers and nickel product exporters continue to fall short of market expectations, which will bring significant upward risks to nickel metal prices that have been lost for a long time. The investment agency said in a research report on Wednesday that although Indonesia may cut nickel production, the agency still believes there is a slight oversupply in the market this year.

Due to the surge in nickel production in Indonesia in recent years and a sharp decline in demand from battery manufacturers and the stainless steel industry around the world, nickel prices have plummeted for two consecutive years, and prices can be described as falling short since 2023. This year, traders in the commodity sector are paying attention to the impact of the Chinese government's economic stimulus policy and the US government's imposition of tariffs on foreign countries under the incoming Trump presidency. These two major factors will have a significant impact on the level of nickel demand, which in turn will affect the LME nickel metal trading price.

According to Macquarie statistics, in addition to these two major macroeconomic factors, the scale of nickel production in Indonesia will also be a key influencing factor in nickel metal trading prices. As nickel prices continue to be low, the Indonesian government began to adopt some moderate restrictions in 2024. The Indonesian nickel mining and supply scale, which accounts for nearly half of global nickel production, was unable to meet all demand last year. As a result, some upstream metal companies began importing record nickel from the Philippines, but nickel prices continued to be sluggish due to large excess on the supply side.

In 2023, the trading prices of lithium, nickel, and cobalt all collapsed, followed by a continuous sharp drop in 2024. These “electrification dreams” focusing on the “three major battery metals” of electric vehicles have clearly become “nightmares” that are difficult to escape. As low prices erode the cost curve, the production-increasing business unit, which once competed to build a new metal supply, has been closing mines and continuing to delay the progress of new projects.

If Donald Trump, who will return to the White House in January next year, fulfills his electric vehicle threat, that is, abolish the electric vehicle policy led by the Biden administration, then US electric vehicle subsidies may be completely abolished next year. At that time, the growth rate of electric vehicle sales across North America may decline further or even grow negatively. For lithium, nickel, and cobalt prices, which have been sluggish for a long time, may drop further.

However, as far as battery metal prices continue to fall, at least the Indonesian government authorities have shown positive signs of supply discipline, limited mining quotas, and suspended approval of new mining processing plants.