15 January 2026 – Following the announcement by Indonesia’s Ministry of Energy and Mineral Resources (ESDM) that it intends to cut nickel mining quotas by up to 34%, nickel and stainless steel prices in Asia moved higher. At the same time, the controversial free trade agreement between the European Union and the Mercosur countries remains under severe strain: Hungary has announced legal action against the agreement, while planned EU steel tariffs could leave Mercosur states facing restricted market access without any import quotas.
Indonesia Cuts Mining Quotas: Nickel and Stainless Steel Prices Rise
Nickel prices on the European commodity exchange LME had already started to rise on Wednesday. Prior to that, several media outlets reported that Indonesia’s Ministry of Energy and Mineral Resources (ESDM) had recently confirmed that its 2026 Work Plan and Budget (RKAB) sets a nickel ore production target of approximately 250 to 260 million tonnes.
This would place production almost 34% below the target of 379 million tonnes defined in the 2025 RKAB.
Quota Cuts Intended to Reflect Industrial Demand
Tri Winarno, Director General for Minerals and Coal at the Ministry, stated that the quota reductions are primarily intended to align production more closely with the capacity requirements of Indonesia’s processing and smelting industry.
However, over the past two years, suspicions have also intensified that reserves of high-grade nickel ore are being depleted faster than previously assumed, strengthening the argument that Indonesia needs to better protect its most important raw material.
Nickel Processing Industry Pushes Back
Indonesia’s downstream nickel processing industry takes a more critical view of the new mining quotas, which the government considers sufficient to meet industrial demand. According to downstream producers, the revised quotas could leave a shortfall of up to 100 million tonnes of nickel ore relative to actual requirements.
Overall, industry representatives warn that the government’s measures will further tighten nickel supply and increase the risk of an ore availability deficit. In both 2024 and 2025, there were repeated reports of smelters having to import nickel ore from other regions, such as the Philippines, in order to meet demand.
Nickel and Stainless Steel Prices Move Higher
In response, nickel prices on the SHFE rose by more than 4% today. On the Chinese spot market, nickel gained around 2.6%. Nickel pig iron increased by more than 3%, while ferronickel prices rose by nearly 2%.
Stainless steel futures on the SHFE climbed by more than 2.4%, accompanied by higher prices on the Chinese spot market. Grade 304 gained up to 3.6%, 316L rose by up to 2.3%, and prices for the 200 series increased by around 1.4%. Even grade 430, which contains no nickel, rose by just under 1%. Prices for stainless steel scrap increased by approximately 1.2%.
EU-Mercosur Agreement Facing a Breaking Point?
The trade agreement between the European Union and the Mercosur countries, which has been under negotiation for 25 years, is increasingly becoming a point of rupture for the parties on both sides of the Atlantic.
While European Commission President Ursula von der Leyen, together with President of the European Council António Costa, plans to sign the agreement in Paraguay this coming Saturday, approval from the European Parliament is still outstanding. This has recently triggered significant protests from Members of Parliament, who feel sidelined by the Member States and the Commission.
Despite Ursula von der Leyen urging her own party and the Parliament to support the agreement, it remains uncertain whether her appeal will succeed.
Hungary Announces Legal Action Against the Agreement
Hungary has now also announced that it will file a lawsuit with the European Court of Justice should the agreement enter into force in its current form. Hungary argues that the safeguard clauses contained in the agreement do not provide sufficient protection for European farmers.
Will Planned EU Steel Tariffs Burden the Mercosur Agreement?
Concerns may also arise on the side of the Mercosur countries themselves, which have not yet ratified the agreement, particularly in view of the planned EU steel tariffs of up to 50%. This could lead to renewed demands for negotiations.
Currently, the chapter on “bilateral safeguard measures” in the EU-Mercosur agreement – unlike many other EU free trade agreements – does not provide for compensation should one side impose such measures. While the draft text from 2017 still provided for compensation payments in the case of bilateral safeguard measures.
For Brazil, this would mean that the EU could raise tariffs on Brazilian steel exports to 50% without providing any compensation, effectively excluding Brazilian steel from the EU market. For Brazil’s steel industry, this could result in annual losses of up to USD 800 million.
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