LONDON — In a major update that has sent bullish waves across the global base metals and stainless steel sectors, Goldman Sachs has officially lifted its 2026 average nickel price forecast.
According to a research note released by the bank, the average nickel price outlook for 2026 has been revised upward to US$18,500 per metric ton, up significantly from its previous baseline estimate of US$17,200/MT. The aggressive pivot comes in response to severe structural bottlenecks in Indonesia—the world’s premier nickel producer—which controls well over 60% of the global mining supply.
A Historic Milestone: First Indonesian Supply Drop in 10 Years
For nearly a decade, global stainless steel mills and battery manufacturers have relied on a continuous flood of low-cost Indonesian nickel to suppress raw material volatility. However, Goldman Sachs projects that this era of unchecked oversupply has come to an abrupt end.
The bank predicts a 1% annual drop in Indonesian refined nickel supply for 2026. While a 1% contraction may appear minor on paper, it represents a monumental structural shift: this will be the first net-negative year-on-year decrease in Indonesian output in an entire decade.
The Double Squeeze: Quota Restrictions and the Sulfur Crisis
The Goldman Sachs report identifies two distinct, compounding factors that are strangling refined metal output simultaneously:
1. Aggressive Mining Quota (RKAB) Discipline
The Indonesian government has significantly tightened its regulatory grip on domestic mineral extraction, approving far lower mining quota allocations than local smelters require. This tight bureaucratic bottleneck has drained raw material availability, forcing domestic processing facilities to either cut back throughput or buy lower-grade ores at substantially higher unit costs.
2. Severe Hydrometallurgical Sulfur Shortages
While traditional smelters making Nickel Pig Iron (NPI) are hurting for raw ore, specialized High-Pressure Acid Leach (HPAL) facilities—which process nickel intermediates (MHP) for the clean energy and high-end alloy sectors—are facing an acute chemical logistics crisis.
Geopolitical instability has driven a global shortage of sulfur, a critical reagent needed for the acid-leaching process. Goldman Sachs warns that if these sulfur deficits persist past June, the market could witness broader HPAL curtailments of an additional 50,000 tons of refined capacity, pushing prices even higher.
What Lies Ahead: Q2 Peaks and a High Floor
The London Metal Exchange (LME) reacted immediately to the structural supply signals. Benchmark three-month nickel contracts surged past $19,200/MT, building on momentum that saw prices temporarily breach the $20,000/MT threshold—their highest trading level since May 2024.
[Q1 2026 Baseline] ──> Average tracking near $17,200 / MT
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[Q2 2026 Peak] ──> Smashes through $19,250 - $20,000 / MT (Current Window)
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[Q3 2026 Release] ──> Supplementary ore quotas expected from Jakarta
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[Q4 2026 Level] ──> Normalizes to a firm floor of $18,500 / MT
Goldman Sachs does expect the Indonesian government to approve supplementary ore quotas in the third quarter of 2026 to help stabilize local operations. This secondary release should facilitate a partial normalization of supply in the second half of the year, easing prices down from their current second-quarter peak of $19,250/MT toward an expected $18,500/MT baseline by the fourth quarter.
However, the bank strongly cautions that risk profiles remain heavily skewed to the upside. If the global sulfur squeeze continues to choke out processing plants, prices are highly likely to test new multi-year records, establishing a permanent, elevated cost floor for downstream stainless steel production through the remainder of the fiscal year.
