Core Viewpoint - Nickel prices have shown strong performance during the New Year holiday, with LME nickel futures reaching a 14-month high of $16,950 per ton on January 2, 2025, driven by supply concerns following policy signals from Indonesia [2] Group 1: Nickel Price Trends - Since mid-December 2025, both domestic and international nickel prices have been on the rise, with the Shanghai nickel futures contract peaking at 135,570 yuan per ton, marking a 13% increase for the month [2] - The market is highly sensitive to any supply-side changes, especially after a significant price correction that brought valuations to historical lows [2] Group 2: Indonesian Policy Impact - Indonesia's nickel mining association announced a reduction in the 2026 RKAB approval quota to 250 million tons, a 40% decrease from the 379 million tons approved in 2025 [2] - Analysts predict a supply gap in the smelting sector, as domestic nickel ore demand is estimated to be between 280 million to 290 million tons, while the approved mining quota is only 250 million tons [3] Group 3: Market Dynamics and Future Outlook - The nickel industry is currently in a capacity expansion cycle, with supply growth outpacing demand growth, leading to concerns about supply tightening if the 2026 quota is strictly enforced [3] - The potential implementation of a by-product tax on cobalt and other associated minerals may increase operational costs for mining companies, but its impact on nickel prices is expected to be limited [4] - The market is currently focused on the feasibility of Indonesian policies, with two scenarios considered: strict enforcement of the 250 million ton quota leading to price increases, or failure to meet announced levels resulting in potential price corrections [4] - The nickel market is expected to remain tight in the first half of 2026 due to administrative bottlenecks and seasonal weather impacts, with a potential recovery in supply as new quotas are released in the second quarter [5]