Nickel prices tumbled to their lowest level since mid-July after renewed market speculation that Indonesia is set to allow a larger production quota for a major domestic mine, potentially increasing global supply.

On the London Metal Exchange, nickel futures fell by as much as 2.1% to hit $16,750 per tonne. Shanghai Metals Market reported that the mining company would receive an additional quota of tens of millions of tonnes for the second half of the year, though it did not name the specific firm. A spokesperson for Indonesia's Ministry of Energy and Mineral Resources did not immediately respond to a request for comment.

Indonesia is the world's top nickel producer, accounting for roughly 60% of global output. The metal is used in both stainless steel and batteries. Changes in the country's supply policy can significantly influence the global market balance. In June, media reports indicated that the Indonesian government plans to substantially increase nickel production later this year.

As of the time of writing, nickel futures on the London Metal Exchange were down 1.7% at $16,825 per tonne. The price has remained virtually flat for the year to date.