Nickel Alloy Market Under Pressure as Indonesia Tightens Grip and Middle East Crisis Disrupts Supply Chains

The global nickel alloy market is navigating a perfect storm of converging pressures this week. On one side, Indonesia is tightening its control over nickel exports through a controversial new regulation. On the other side, the ongoing Middle East conflict is choking off critical refining inputs, sending shockwaves through supply chains from Mumbai to Seoul.

Nickel Alloy buyers in India are already feeling the heat. The country imports roughly 80 percent of its ferronickel requirements from Indonesia, and that pipeline is now under threat. The problem is not just about Indonesian policy. It is about sulfur and phosphoric acid – essential inputs for the High Pressure Acid Leaching (HPAL) process that turns raw nickel ore into battery-grade material.

Indonesia relies heavily on sulfur imports from the Middle East. With the Strait of Hormuz effectively blockaded by the ongoing conflict, those shipments have slowed to a trickle. Jayprakash Sahu, general manager at BigMint, a commodities data intelligence service, told Mint that “rising sulfur and sulfuric acid costs are increasing HPAL processing costs for MHP production” . For manufacturers that use Nickel Alloy in EV batteries and stainless steel, this translates directly into higher input costs and longer lead times.

The numbers back up the concern. Nickel prices in India climbed 7.2 percent to 171,540 rupees per quintal in April, up from 159,890 rupees in February, according to data from the Centre for Monitoring Indian Economy. Global prices rose as well, though at a slower pace.

Indonesia is not just dealing with external supply shocks. The government recently revised its nickel ore pricing formula and imposed stricter compliance on mining quotas. A new regulation requires that exports of certain commodities, including ferronickel (FeNi), be channeled through a state-owned enterprise. Low-purity nickel pig iron (NPI) is excluded from this policy, but FeNi is included because of its iron content. This is creating confusion in the market. Buyers are unsure who to contract with, and sellers are trying to figure out how the new rules will affect their margins.

Tarun Khulbe, CEO of Jindal Stainless, told Mint that “Indonesia has recently revised the pricing formula of nickel ore and has strict compliance on the nickel ore quotas, which has led to price increases across all nickel alloys” . His company has managed to avoid major disruptions through a multi-sourcing strategy that includes NPI, scrap, and slabs. But smaller manufacturers may not have that flexibility.

Meanwhile, production of nickel intermediates in Indonesia is falling. According to Mysteel data, Indonesia’s nickel wet intermediate production (MHP) dropped 16.31 percent month-on-month in April to 27,200 metric tons of nickel equivalent . The year-on-year decline was 13.07 percent. For May, the forecast is even worse: an estimated 26,300 tons, down 33 percent from the same month last year. HPAL operators are struggling with both sulfur shortages and high-sulfur prices.

Nickel Alloy demand from the Chinese alloy sector remains robust despite these supply headwinds. March 2026 data from Mysteel shows that alloy sector nickel consumption in China reached 17,500 tons, an increase of 18.83 percent month-on-month and 7.09 percent year-on-year . That is the kind of demand growth that would normally push prices higher. But the global market remains in a strange position – oversupplied at the macro level but tight in specific intermediate products.

The macro picture is complicated. LME nickel inventory remains high. But the market is bifurcated. There is plenty of Class I nickel sitting in warehouses. What is getting tight is the supply of nickel intermediates – MHP, mixed sulfide, and certain grades of ferronickel – that feed directly into battery supply chains and stainless steel mills.

Western markets are not immune to these pressures. In Texas, SeAH Superalloy Technologies (SST) is pushing toward full operation of its new special alloy plant in Temple, Texas . The facility, the first of its kind built by a Korean company in the United States, is targeting aerospace customers including SpaceX and Airbus. SST has completed hiring for key roles, including a metal chemist responsible for alloy composition analysis, suggesting that the melting furnace has entered the trial-run stage. CEO Michael King posted on social media that the project is “on track, on time, and under budget.” The plant is expected to begin full-scale operations as early as next month. For Nickel Alloy buyers in North America and Europe, this represents a new source of supply – but it will not solve the immediate intermediate-grade tightness coming out of Southeast Asia.

Back in Indonesia, there is some relief on the horizon. Nickel Industries’ ENC HPAL project has completed pre-commissioning and is scheduled to begin integrated commissioning in May 2026. The facility has stockpiled enough sulfur to last through September at an average price of $450 per ton. But that is a one-time buffer. Once those stocks are depleted, the plant will face the same sulfur market that everyone else is fighting over.

What does this all mean for companies that rely on Nickel Alloy? First, expect continued price volatility. The combination of Indonesian policy uncertainty and Middle East supply disruptions means that forecasting input costs for the second half of 2026 is going to be difficult. Second, consider diversifying sources. India’s Energy Storage Alliance has already called for a broader material security strategy that includes partnerships with Australia, Japan, and Norway, as well as improved domestic recycling capacity.

The nickel alloy market is not crashing. But it is changing. Companies that treat nickel as a commodity they can source at stable prices on short notice are going to be disappointed. Those who build inventory, sign longer-term contracts, and develop multiple supplier relationships will sleep better at night. The days of abundant, cheap nickel intermediates may not be over, but they are certainly on pause.