A healthy scepticism never did any harm

Nickel market “woken up”
For some time now, the nickel contract on the London Metal Exchange (LME) has led a shadowy existence. It had more or less completely disappeared from the focus of investors. In 2025 prices had at first only known one direction, the one down, but from May to October there was a relatively stable phase. Nickel oscillated in a tight range between USD 14,800.00/mt and USD 15,600.00/mt. From November it once more moved down, to a low of around USD14,250.00/mt; although with a brief temporary high of just under USD 15,000.00/mt.

But since the end of December, it is all different. It is as if someone has breathed new life into the nickel market. And for a change, it was not even US-President Donald Trump. What has happened?

Over Christmas and towards year end nickel prices rose sharply on the London Exchange, and in the new year made even faster moves. On 17th December 2025 the nickel price was still at USD 14,255.00/mt for the three months future, yet by the 7th January 2026 it had reached USD 18,800.00/mt, the highest level since the beginning of June 2024. This is, after all, an increase of around 32% in just a few days.

This could be thought as being too rapid. Therefore, it was initially feared that it could be a renewed case of a significant squeeze. A (short) squeeze describes an unusual market phenomenon where the price of a stock or another exchange traded value rises rapidly, because investors, who had previously counted on falling prices (short sellers), are now forced to close those positions to minimise loss. This, however, is not the most plausible explanation at the moment.

Exchanges do not trade facts, but expectations. And the assessment regarding an oversupply of nickel has apparently changed quite clearly with at least some of the traders. In this context it is significant that Indonesia is by far the biggest nickel producer in the world. The country is responsible in the meantime for about 70% of global nickel production and so influences the global market balance considerably.

The background to this rise were, therefore, probably remarks made by the Indonesian government saying that the licences for nickel production in Indonesia would be significantly reduced. Added to this was the real news that the nickel producer PT Vale Indonesia had to stop its mining activities because of a delay in permits for 2026.

This situation quickly attracted numerous investors who speculated that nickel prices would sharply rise due to expected shortages. They massively bought nickel futures on the LME, therefore actually unleashing the expected price rise. And the respective reporting of the LME for this timeframe also shows a notable increase in long positions bought by speculative market participants, which had increased by 50% over the previous week.

One part of these positions has in the meantime been closed again for profit taking, for on the 8th January 2026 already, it was reported by the media, such as Reuters, that while the Indonesian Mining Minister may have indeed announced concrete quotas for coal mining in 2026, there would not be any further details given in regard to nickel. The commentary regarding this remained rather vague indeed. Quotas for 2026 were still being calculated and these would be orientated to fit the needs of domestic smelting plants. Final figures for the current years were not announced.

Fully in line with the saying “buy the rumour, sell the fact”, this was a bitter disappointment for speculators – they had expected more information about the extent of restrictions. And with a matching confirmation, the price rally would have also probably continued. But quite a number therefore sold their speculative positions and tried to realise the profits made through the price hikes. This then led to a fall in price just as quick as the rise in price had been. The market saw a correction to USD 16,835.00/mt.

Why did investors react so sceptically? In previous years, the Indonesian government had already made repeated statements about restrictions on nickel production, which, however, were never seriously implemented. The market has, therefore, become very cautious, and does not have unconditional faith in such statements anymore. Without a significant reduction of deficit nickel production in Indonesia, the world’s biggest nickel supplier, then the primary nickel market remains significantly over supplied. This keeps pressure on the prices.

On the other hand, Indonesia is in possession of direct control instruments, especially in the allocation of production quotas (RKABs) which can limit supply in the short-term. At the editorial deadline, nickel was trading at USD 17,800.00/mt.

Copper on the rise: energy transition and AI are driving structural demand
Not only nickel, but all global industrial metal markets started the new year with considerable dynamics. Copper has especially received a lot of attention: The metal profited from a combination of long-term demand requirements, increased supply discipline and a strong capital influx. Despite partially subdued economic signals, prices are reaching new multi-year highs and record levels. The rally in copper recently speeded up and exceeded the 13,000 US-dollar per tonne level for the first time. Since the beginning of the year, the price rise has totalled well over 35% – the strongest start to a year since the financial crisis of 2009.

Above all, the market is pushed by the strong growth in demand from structural future sectors. The expansion of data centres for artificial intelligence demands enormous amounts of electricity and high-performance networks. Copper is indispensable due to its exceptional electrical conductivity – not only for power grids, transformers and cables but also for electric mobility and charging infrastructure. Added to this are investments in renewable energies such as turbine and solar power which are equally copper intensive.

At the same time, the supply side remains tense. Mining disruptions, accidents and project delays limit production growth. Several large producers have recently lowered their production goals or postponed investments which has further aggravated structural shortages. Analysts, therefore, see significant supply deficits not only for this year but also for the next year. It can also be assumed that, not least against the backdrop of the high demand for copper, discussions about the mega-fusion of Glencore and Rio Tinto, two of the major players in the copper market, will be resumed.

Trade policy factors are additionally causing distortions in the physical market. Expected US import tariffs have drawn huge amounts of copper into the United States. The stocks in the COMEX (Commodity Exchange) warehouses have increased enormously while the warehouses in Europe and Asia are emptying noticeably. Outside of the USA the market is appearing more and more nervous because of this, which supports price developments.

A look at Venezuela: rich in raw materials, but structurally blocked
In the present geopolitical climate, Venezuela has again become heavily in the focus of international commodity markets. As well as its huge oil reserves, the country has significant resources of bauxite, gold, industrial diamonds and also coltan – a critical mineral for mobile telephones, laptops and other high-tech applications. Yet Venezuela is far away from being able to play a relevant role in global mining.

Despite the geopolitical potential, the Venezuelan raw material sector suffers from a number of structural problems. These include missing and outdated geological data, a lack of qualified skilled personnel, insufficient infrastructure, organised crime and also a highly volatile political environment. A reliable national raw material inventory has not existed since 1994, which makes exploration and project evaluation considerably more difficult.

The decline of the mining sector can be crucially traced back to the Mining Act of 1999, which was passed under the presidency of Hugo Chavez. The total centralisation of mineral rights and the obligation for a state share in all projects drove out private investors, which led to a drastic reduction in exploration, production and investment.

Another turning point was the creation of the Arco Minero in 2016 under President Nicolas Maduro. Around 12% of the national territory in south Venezuela was designated as a mining zone. Today, however, the area – approximately as big as Portugal – is a centre for illegal activities, massive environmental destruction and under criminal control. The state has effectively lost control, which deters serious international companies.

A return by Venezuela as a relevant supplier of critical minerals does necessitate, therefore, radical reforms: A transparent mining codex, the restoration of legality, investments in exploration and infrastructure as well as a consequent implementation of state control in the mining areas.

India extends protective tariffs on steel imports – protection against global oversupply
(Also) India continues to rely on trade policy measures to protect its steel sector and has extended its existing import tariffs by three years. The Finance Ministry announced an implementation of tariffs between 11 % and 12 % for selected steel products in the future. Originally the measures which were introduced last April were initially valid for 200 days, but are now markedly extended.

Background to this is the continuing global oversupply of steel, which has pushed prices to a multiyear low. High export volumes from China have especially troubled numerous markets worldwide. Also in India, the increased supply of cheap imports led to mounting pressure on domestic producers. Major producers such as JSW Steel had to accept cuts in margin, while smaller steel works have even had to partially stop production because of the competitive environment – despite a continued stable domestic demand.

India’s steel industry has grown strongly in the past ten years, but compared internationally, it remains undoubtedly smaller than that of China. In the long-term, producers are counting on a rising demand because of continuing urbanisation and industrialisation. Therefore, the extended protective tariffs are considered as an important step in giving the domestic industry time to breathe in the short-term and to increase investment security.

The decision has been seen positively by the markets. Shares of Indian steel producers rose: State and private producers showed considerable gains which underlines the value of the measures for the industry.

Mining in transition: critical raw materials, climate goals and the return of the state
The global mining industry is at a turning point – this was shown in the final quarter of last year at the IMARC conference in Sydney, one of the biggest industry meetings worldwide with over 10,000 participants. Three topics dominated discussions: The race for critical minerals, the economic decarbonisation and the growing role of governments in raw material policy.

The push for projects involving rare earths, lithium and other strategic raw materials, has never been as great as last year. In the exhibition area, numerous junior explorers presented their projects in order to win over investors – a clear signal as to where capital is flowing at the moment. Five years ago, gold and before that battery metals, such as cobalt or nickel, were the focus, now it is all about critical raw materials and also some projects involving rare earths. Many of the projects presented should contribute to the diversification of supply chains in the coming years and should, therefore, lessen dependence on the dominant producer, China.

The reduction of emissions also remains a central topic – even if more pragmatic than in previous years. Despite political opposition, such as by Donald Trump’s renewed gain in power in the USA, most companies are still backing climate friendly production. The focus is, however, moving more towards efficiency: Decarbonisation is seen less of a moral duty, but more as a way of lowering energy costs. This economic incentive could even speed up the transition in the long-term.

Another key issue was the increasing state influence. This is symbolised by the recently concluded agreement between Australia and the USA covering investments of up to 8.5 billion US-dollar for the extraction and processing of critical raw materials. The aim is to diversify supply chains and to reduce dependence on China. Yet the development of alternative capacities will be expensive – and Western governments have to be clear how much value strategic independence really has. Also here, the circular economy can be a solution to greater self-sufficiency.

Also noteworthy: There have not been any of the usual environmental protests – an indication that even climate activists increasingly acknowledge that energy transition is not possible without mining. Criticism is now being directed more at the oil and gas industry, which is increasingly seen as the main cause of emissions.