Driven by a significant surge in LME nickel prices, domestic SHFE nickel prices also climbed during Friday's early trading session, with intraday gains exceeding 2%. This upward movement also pulled downstream stainless steel prices higher. The primary driver behind this price strength appears to be Indonesia's recent policy announcement. This week, Indonesia's Ministry of Energy and Mineral Resources issued a decree setting the second batch of reference prices for metal minerals and coal for April 2026. According to calculations by Shanghai Metals Market (SMM), the base price for low-grade nickel ore used in stainless steel production surged by 135%, while the base price for low-grade nickel ore used in raw materials for new energy batteries soared by 132%. The resulting increase in import costs is likely a key factor driving the short-term strength in domestic nickel prices.

From a production perspective, a Reuters report indicates that several Indonesian nickel processing companies have been forced to cut output by at least 10% since last month due to sulfur shortages caused by supply disruptions linked to the conflict involving Iran. Against a backdrop of tightening Indonesian nickel ore quotas, disruptions to raw and auxiliary materials, combined with the adjustment to benchmark prices, are contributing to persistent strength on the cost side. Market participants are advised to monitor whether supply conditions tighten further and if changes in primary nickel inventory levels provide positive feedback. In the short term, nickel prices are expected to maintain a relatively strong trajectory, although caution is warranted regarding the impact of overseas geopolitical events and inventory pressures. Additionally, attention should be paid to the possibility of supplementary quotas being issued around July.