metal&ROCK: Nickel: Supply Down, Costs Up

Research evidence excerpt

metal&ROCK: Nickel: Supply Down, Costs Up

Idea

May 22, 2026 06:33 PM GMT

Morgan Stanley & Co. International plc+Mmetal&ROCK | Europe Amy Gower (Amy Sergeant), CFA

Commodities Strategist

Nickel: Supply Down, Costs Up Amy.Gower1@morganstanley.comBen Kelson +44 20 7677-6937

Research Associate

Ben.Kelson@morganstanley.com +44 20 7677-1392

We see nickel trading in a higher range as changing policy in Martijn Rats, CFA

Indonesia and sulphur shortages put production at risk, while EquityMartijn.Rats@morganstanley.comAnalyst and Commodities Strategist +44 20 7425-6618

costs are rising, particularly for HPAL producers. We see

downside support at the 90th percentile of the cost curve at Exhibit 1 : Indonesian policy and

$16,500/t. consequences of the conflict in the Middle

East have been important recent price drivers

Key Takeaways LME Nickel 3m Price ($/t)

1 2 3 4 5 6

Indonesia's lower ore quotas, sulphur shortages and competition for power bring 20,000

downside risks to production. 19,000

18,000

Higher sulphur costs and the new ore pricing formula raise the cost curve, 17,000

particularly for HPAL producers. 16,000

There is scope for more mining quotas to be released in 2H, while a resumption 15,000

of sulphur shipments from the Middle East would provide some respite too. 14,000Oct-25 Nov-25 Dec-25 Jan-26 Feb-26 Mar-26 Apr-26 May-26

Net positioning is already long, and the demand outlook is more subdued, but we

Source: Bloomberg. 1. RKAB cuts rumoured (17/12/2025), 2. RKAB cuts

see nickel in a higher trading range from here. confirmed (10/02/2026), 3. Start of Middle East conflict (28/02/2026), 4.

HPM formula revision (10/04/2026), 5. Higher royalties and export tax

delayed (08/05/2026), Central export body announced (20/05/2026).