Nickel prices reached their lowest levels in four years last Thursday, driven by a more pessimistic economic outlook from the Federal Reserve and concerns about supply cuts in Indonesia. Futures on the London Metal Exchange (LME) fell by as much as 2.3%, hitting levels not seen since November 2020. Nickel is an important component in electric vehicle (EV) batteries but has been one of the worst-performing industrial metals this year.

The Federal Reserve’s quarterly forecasts, released on Wednesday, added pressure to the market. The projections indicated that fewer interest-rate cuts are expected in 2025 compared to earlier estimates. This shift in policy signals a stronger U.S. dollar and higher borrowing costs, both of which weigh on commodity prices.

Indonesia, the world’s leading producer of nickel, has also hinted at some upcoming potential measures to counteract the metal’s declining value. Bloomberg reported on Thursday that the country is considering a substantial reduction in its nickel mining quotas for 2024. According to unnamed sources familiar with the discussions, the proposed cap could drop to 150 million tons of nickel ore, a significant decrease from the 272 million tons mined in 2023.

This potential cut could stabilize prices during an oversupply of nickel. In recent years, Indonesia has expanded its nickel mining capacity, contributing to the current oversupply. But with the metal’s declining demand, partly due to a slowdown in EV sales, the situation has been exacerbated and prices have slid.

Nickel prices, which peaked at over $100,000 per ton in 2022 during a highly volatile short squeeze, have fallen approximately 8% this year. The market’s downturn reflects broader challenges, including the delayed adoption of EVs and oversupply concerns.

The drop in nickel prices mirrors declines in other industrial metals. By 1:47 p.m. London time on Thursday, nickel had fallen 1.8%, settling at $15,235 per ton on the LME. Copper, aluminum, and zinc also saw declines, further highlighting the difficult environment for commodities.

Indonesia’s potential decision to cut mining quotas could be a turning point for the nickel market, but there is still some caution that broader economic factors remain an obstacle. The Federal Reserve’s more hawkish stance could suggest prolonged economic headwinds for commodities, leaving the future of nickel prices uncertain.

As the global economy grapples with rising financing costs and uneven demand, the coming months could determine whether these measures are enough to revive the metal’s fortunes or if further challenges are ahead for one of the most essential materials in the transition to cleaner energy.