London Metal Exchange (LME) nickel futures rose to close at US$16,913 per ton yesterday (September 2), recovering from a multi-week low as a weaker US dollar and possible nickel supply disruptions provided support.

El Niño conditions triggered water shortages in Indonesia, leading to expectations of a 30-40% nickel production reduction at the Indonesia Morowali Industrial Park (IMIP), the country's largest nickel processing hub.

Although global refined nickel inventories remain high and demand in China's stainless steel sector stays soft, Indonesian output accounts for over half of global supply. Market participants indicated that potential production cuts at the major facility could sustain firmer nickel price momentum in the short term.