Indonesia has cemented its position as the world's leading nickel producer, supplying over 56% of the global mined nickel in 2024. This dominance is expected to grow, with forecasts predicting a 7.7% increase in output in 2025, reaching 2.4 million metric tons.

The country’s rise in nickel production stems from a 2020 ban on raw ore exports, which prompted significant Chinese investments in local processing plants. These facilities process nickel laterite ore into ferronickel, a crucial material for stainless steel manufacturing.

While Indonesia’s nickel boom benefits its economy, it has also contributed to an oversupply on the global market, adding downward pressure on prices.

Recently, the Indonesian government is considering cutting its nickel mine quotas by nearly 40% in 2025. This reduction could shrink global supply by over a third, potentially pushing nickel prices higher, according to Macquarie Group Ltd. and Bloomberg reports.

The proposed cuts would lower output from 272 million tons in 2024 to just 150 million tons in 2025.

These mining restrictions have already strained supply, with Indonesia's nickel ore imports from the Philippines, the second-largest producer, reaching record levels in 2024. Despite this, the global market still saw an oversupply, with reduced demand from the stainless steel and battery sectors contributing to nickel’s second consecutive annual price decline.