A new sulphur squeeze cuts Indonesia's battery-nickel output
The test Between 26 Oct 2026 and 31 Oct 2027, one or more Indonesian HPAL operators announce, or two independent reports confirm, new cuts or halts of mixed hydroxide precipitate (MHP) output covering at least 30,000 t a year of contained-nickel capacity, with sulphur or sulphuric acid supply or price named as a cause.
Not under way · Confidence: low · Reviewed 25 Oct 2026 · Scores from 1 to 10
This page answers: What could happen, how it is scored, and who is exposed?
Using this page
- Read the two scores: Likelihood and Impact are kept apart.
- Check what is happening, each fact with its source.
- Use the calendar for the dates to watch.
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Impact is the average of the four parts, rounded, plus one point when Canada is directly hit on two or more channels, up to 10.
Two separate scales from 1 to 10. Strature never multiplies or merges them.
What changed
Dated, newest first
- Likelihood 4 to 5.
- INSG: world primary nickel output 3.868 Mt in 2026 vs 3.875 Mt in 2025; 2026 surplus 19 kt; 2027 RKAB applications 1 Oct-15 Nov 2026 [4]
- Vale Pomalaa HPAL (120,000 t a year MHP) mechanical completion by October 2026 at the latest; full output 2027 [7]
- Bloomberg, as relayed: Indonesian HPAL producers discussed lower operating rates, citing weak prices, higher ore benchmarks and sulphur costs; no agreement reported [5]
Why it matters
Indonesia's HPAL plants need about 10-12 t of sulphur per tonne of nickel, and the industry forum FINI, as reported by CNBC Indonesia, put the Middle East's share of the 5.3 Mt imported in 2025 at 75-80%; Argus gives 5.34 Mt, about 75%. When the Hormuz closure cut supply, several plants trimmed output by at least 10% and Huayou put half of its Huafei plant into care and maintenance from 1 May 2026. Flows through the strait are rebuilding but it is still unsafe, so a second squeeze could force new cuts.
Why Likelihood 5 Pushes: the 2026 cuts at Huafei and other plants; Hormuz still unsafe; sulphur a large share of HPAL costs; producers discussed lower operating rates in September. Brakes: rising Hormuz flows; acid import permits and pyrite projects; a market near balance; cuts may be blamed on price alone.
Why Impact 5 Threshold case: cuts of 30,000 t a year of nickel capacity; key price LME nickel.
The other facts on file (5)
- CNBC Indonesia on FINI and its chair: about 5.3 Mt of sulphur imported in 2025, 75-80% from the Middle East; Hormuz closure disrupting HPAL's main raw material; 10-12 t of sulphur per tonne of nickel in MHP [1] (24 Apr 2026)
- Several processors cut output by at least 10% since March at plants backed by Huayou, Lygend and Tsingshan; some stocks only until May; sulphur around 30-35% of HPAL operating costs [2] (14 Apr 2026)
- Huayou said on 28 Apr it would put half of Huafei's 120,000 t a year MHP capacity into care and maintenance from 1 May; sulphur US$948/t cfr Indonesia on 23 Apr, up 84% from 26 Feb; sulphur 35-40% of HPAL costs; nearly half of seaborne sulphur passes Hormuz; 2025 imports about 5.34 Mt, roughly 75% from the Middle East [3] (29 Apr 2026)
- June 2026 MHP output 29,900 t of metal, about 29% below January's 42,000 t (as reported by Deep News) [6] (8 Jul 2026)
- Canada mined 125,364 t of nickel in 2024; nickel and nickel-based product exports C$4.5bn [9] (2024)
Where it sits
How it spreads
Between 26 Oct 2026 and 31 Oct 2027, one or more Indonesian HPAL operators announce, or two independent reports confirm, new cuts or halts of mixed hydroxide precipitate (MHP) output covering at least 30,000 t a year of contained-nickel capacity, with sulphur or sulphuric acid supply or price named as a cause.
Not under wayChannels 4 on the card
- CanadaCanadian nickel producers gain on price; no Canadian loss.
- Battery supply chainsA cut tightens MHP for Chinese, South Korean and Japanese cathode makers (Strature reading).
- Nickel marketA 30,000 t cut is larger than INSG's forecast 2026 surplus of 19 kt [4] (Strature's arithmetic on [4]; not a price forecast).
- Indonesia's downstream policyHPAL is the core of the processing drive; the National Economic Council chair named sulphur among strategic commodities to watch.
Sectors 2
- Mining and metals
- Autos
Straits 1
Countries 8
Who is exposed
- Countries
- Indonesia, Saudi Arabia, Qatar, United Arab Emirates, China, South Korea, Japan
- Sectors
- Mining and metals, Autos
- Goods
- Sulphur, Sulphuric acid, MHP, Nickel, Cobalt
- Straits
- Strait of Hormuz
- Companies
- Huayou, Lygend, Tsingshan, Vale Indonesia
Three scenarios and their signposts
- S1
Adapted
Hormuz flows keep rising, acid plants and pyrite come on line, and output recovers.
- S2
Price-led cuts
Producers cut operating rates on price, naming sulphur costs among the reasons.
- S3
Second squeeze
A new strike on Iran or attacks on Gulf ports stop sulphur loadings, and plants with weeks of stock cut or halt.
| Path | Signpost |
|---|---|
| S1 | Huayou's new acid projects running by end-2026 |
| S2 | A company statement on operating rates |
| S3 | A strike inside the window of Strature forecast F-0074: 61% (21 Aug 2026) |
No probability is given for the three paths.
Forecasts
Strature forecast linked to this risk
Strature forecast F-0074: 61% (21 Aug 2026) · resolves by 20 Nov 2026
Where the card uses it A strike inside the window of Strature forecast F-0074: 61% (21 Aug 2026) Strature forecast F-0074: 61% (21 Aug 2026) (renewed strike on Iran) resolves
A forecast is a probability on a dated question. The Likelihood score above is a separate judgement and is never turned into a percentage.
The forecast register lists every forecast and how it is scored.
Dates to watch
The dates to watch
A dot is a day, a bar a month or a year; a hollow mark is tentative. The line marks today.
- 15 Nov 2026 Deadline for 2027 nickel ore quota (RKAB) applications [4] Declared · Outside event
- 20 Nov 2026 Strature forecast F-0074: 61% (21 Aug 2026) (renewed strike on Iran) resolves [11] Declared · Strature date
- Dec 2026 Acid projects (pyrite and phosphogypsum) at a Huayou-backed HPAL plant due [3] Tentative · Outside event
- 2027 The Pomalaa HPAL plant reaches full output [7] Tentative · Outside event
- Apr 2027 INSG meetings, week of 19 Apr [4] Declared · Outside event
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The other side
Nickel producers outside Indonesia, Canada's among them, gain from a tighter MHP market. Sulphur suppliers outside the Gulf, and plants that make acid from pyrite or recover sulphur from tailings, gain business.
Connected in Strature
- Was the Strait of Hormuz closed, or repriced cargo by cargo?
- Sulphur
- Electric cars and batteries
- Strait of Hormuz
- Indonesia
- Saudi Arabia
- Qatar
- United Arab Emirates
- China
- South Korea
- Japan
- Canada
- The Strait of Hormuz shuts again Driven by: A re-closure of Hormuz stops Gulf sulphur, 75-80% of Indonesia's imports as FINI put it.
- Qatar keeps force majeure on Asian LNG past November 2026 Shares a channel: The same disruption of Gulf exports through Hormuz.
Sources
9 sources, numbered as the text cites them
- Hilirisasi nikel RI terancam, pasokan sulfur kena imbas perang Timteng. CNBC Indonesia · 24 Apr 2026 · Industry · confidence medium · retrieved 26 Oct 2026
- Indonesia nickel makers trim battery-feed output as sulphur squeeze bites. Reuters via Kitco News · 14 Apr 2026 · News · confidence medium · retrieved 26 Oct 2026
- Indonesia's Huafei to cut MHP output on sulphur costs. Argus Media · 29 Apr 2026 · Industry · confidence medium · retrieved 26 Oct 2026
- INSG October 2026 meetings, press release. International Nickel Study Group · 13 Oct 2026 · International body · confidence high · retrieved 26 Oct 2026
- Chinese-backed nickel smelters in Indonesia consider output cuts. Mining.com.au (citing Bloomberg) via Indonesian Mining Association · 2 Sep 2026 · News · confidence low · retrieved 26 Oct 2026
- Supply crisis in sulfur worsens, Indonesia's June MHP production plummets. Deep News via Tiger Brokers · 8 Jul 2026 · News · confidence low · retrieved 26 Oct 2026
- Vale percepat smelter HPAL Pomalaa, produksi penuh ditargetkan 2027. Katadata · 10 Sep 2026 · News · confidence medium · retrieved 26 Oct 2026
- Nickel facts. Natural Resources Canada · 2024 · Official · confidence high · retrieved 26 Oct 2026
- Strature forecast register, F-0074. Strature · 21 Aug 2026 · Official · confidence high · retrieved 26 Oct 2026
Reviewed 25 Oct 2026 · version 1 · last change: reviewed · All risks