Nickel futures in Shanghai posted their biggest one-day gain since January on Thursday, Nov. 5, closing up 5.3% at 122,550 yuan (about $18,375) a metric ton, after Indonesia said it would act against companies linked to a major nickel ore trader. The move pulled London prices to a two-week high.

For investors in Asia the jump matters because Indonesia now sets the tone for the whole nickel market. It is the world's top producer, so any sign that ore supply could tighten feeds straight into prices for stainless steel makers in China and battery material producers across the region, and into the earnings outlook for listed Indonesian miners.

Indonesia's task force targets ore trading companies

Indonesia's forestry task force said it would take action against companies owned by or affiliated with businessman Arif Kurniawan for operating illegally in forest areas, according to a Reuters report published by Business Recorder. The task force said it had identified possible irregularities in mining governance, licensing and permitting.

Local media described him as a former Glencore trader who controls a large share of Indonesia's nickel ore trade, Reuters reported. The task force did not say in the report how much ore output could be affected, and Capital Times could not establish the volumes involved.

The action lands on an industry already under strain. Indonesian nickel producers have faced higher production costs this year because of sulphuric acid shortages and tighter ore mining quotas, which have led to coordinated output cuts, according to the Reuters report. Jakarta has also said it will weigh the global surplus when it sets ore quotas for 2027.

LME nickel climbs as much as 3%

On the London Metal Exchange, benchmark three-month nickel was up 2.2% at $16,125 a ton as of 1010 GMT on Thursday, after rising as much as 3% to $16,255, its highest level since Oct. 22.

The rally follows a soft stretch. Three-month LME nickel ended Wednesday at $15,675 a ton and the cash price settled at $15,465, according to LME data published by Westmetall. The cash price had fallen as low as $15,200 on Nov. 3. Exchange stocks also edged down, to 275,592 tons on Wednesday from 278,238 tons on Oct. 30, a small drawdown from a large stockpile.

Aluminium was the second-best performer on the LME on Thursday, rising 1.6% to $3,096.50 a ton. Indonesia is expected to be a major source of new aluminium supply next year, Reuters noted. Zinc gained 1.2% to $3,851, lead added 0.8% to $1,895.50 and tin rose 1% to $47,400, helped by a weaker U.S. dollar, which makes metals priced in dollars cheaper for buyers using other currencies.

For listed producers such as Vale Indonesia, whose third-quarter results came out last week, a firmer nickel price feeds directly into revenue.

Iron ore and steel inputs stay in a narrow range

Steelmaking raw materials, the other half of the metals story for Chinese demand, moved far less. On the Dalian Commodity Exchange, the most-traded iron ore contract rose 1.27% to 680 yuan ($101.95) a ton by 0200 GMT on Wednesday, according to Reuters, after slipping 0.59% to 672 yuan on Tuesday. The benchmark December contract on the Singapore Exchange was up 0.88% at $91.5 a ton on Wednesday.

Analysts at Guoxin Futures said Chinese steel mills are expected to restock ore ahead of the Lunar New Year holiday in February, which supported prices. Jiang Mengtian of Horizon Insights said fundamentals remained weak but that a level near $90 a ton offered strong technical support, Reuters reported.

Supply is still building. Iron ore shipments from Australia and Brazil rose 1.3% week on week to 27.9 million tons as of Nov. 2, according to consultancy Mysteel data cited by Reuters. Chinese steelmakers have been cautious about buying because of weak margins, softer steel consumption and high steel inventories. Average daily hot metal output at mills surveyed by Mysteel slipped 0.2% to about 2.32 million tons in the week to Oct. 29.

The Singapore contract fell 6.1% in September and 2.6% in October, and Dalian lost 3.4% and 4.3% in those months. Coking coal and coke futures in Dalian also fell on both Tuesday and Wednesday, weighed down by rising supply, Reuters reported.

The gap between the two markets is the point for metals investors: nickel is trading on supply risk in Indonesia, while iron ore is still trading on soft Chinese steel demand. The next test for nickel is whether the task force names specific mines or permits, and how tight Indonesia makes its 2027 ore quota.