Chinese nickel producers advance plans to cut Indonesian output
21 OCTOBER 2026
WRITTEN BY Jackson Chen
Major Chinese nickel producers are advancing plans to cut production in Indonesia as falling metal prices and rising operating costs put pressure on the industry.
According to Bloomberg, executives from leading producers, including Tsingshan Holding Group, GEM, Lygend Resources & Technology (HKG:2245), and Zhejiang Huayou Cobalt (SHA:603799), are scheduled to meet this week to finalise a potential coordinated output reduction.
The companies have been considering cuts to production at their high-pressure acid leaching (HPAL) plants, which produce mixed hydroxide precipitate (MHP), an intermediate product used in battery-grade nickel production.
Their top executives previously met in August to discuss reducing output, although no agreement was reached.
According to Bloomberg, citing people familiar with the matter, the latest discussions are expected to focus on production cuts based on existing operating rates.
One proposal under consideration would see each producer reduce output by approximately 30%, a figure first reported in August.
However, the plans remain uncertain, with no guarantee that the meeting will take place or that the companies will reach an agreement, Bloomberg said.
Chinese companies have invested heavily in Indonesia’s nickel industry over the past decade, helping the country become the world’s largest producer.
Rising costs pressure nickel producers
The potential cuts come as Chinese nickel producers face increasingly difficult market conditions that have hampered their profitability.
Nickel prices on the London Metal Exchange have fallen approximately 20% from their May highs, including a sharp decline since August.
Cobalt prices have also dropped to a one-year low, adding further pressure to producers that recover the metal as a by-product of nickel processing.
Meanwhile, Indonesia has tightened mining quotas and raised benchmark nickel ore prices as part of efforts to increase government revenue, squeezing margins for downstream processors.
The US-Iran war has added to those pressures by driving up the cost of sulphur, a key input in the HPAL process used to extract nickel and cobalt from laterite ores.
Operations have also been affected by water shortages linked to drought conditions, with some nickel processing facilities facing production disruptions.
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