Nickel miners expect price rally to soften blow of global sulfur supply squeeze

A nickel price rebound could help ease cost pressure on nickel producers that are hampered by globally tight sulfur supplies, executives from Vale and Nickel Industries said on their respective first-quarter earnings calls.

Nickel prices have been rising in 2026, thanks in part to Indonesian production cuts that tightened up the market. The London Metal Exchange nickel cash price closed at $19,284.04/metric ton on April 30, up 27.1% from the 2025 average of $15,171.13/mt.

The price rise may bail out nickel producers caught in a sulfur supply squeeze driven by disruptions in the Strait of Hormuz. Platts, part of S&P Global Energy, last assessed the weekly FOB Middle East solid sulfur contract and spot price at $469/mt April 30, jumping 71.8% from $273/mt on Feb. 5. The rising costs have threatened high-pressure acid leaching facilities in Indonesia, the world's top nickel producer.

HPAL plants use sulfur to extract nickel from ore to produce mixed hydroxide precipitate, a key battery input.

"We're benefiting, I guess, from the higher pricing environment, which is obviously good news," Shaun Usmar, CEO of Vale unit Vale Base Metals, said on an April 29 call. "And we're all just making sure we can control costs and be as agile as we can."

If sulfur supply tightness continues, MHP production costs could increase by $3,000-$4,000/mt, according to Usmar.

"I think we're looking at [producing] about 500,000-600,000 mt of nickel in MHP in 2026," Usmar said. "So [that is] a fairly significant impact."

Usmar said PT Vale Indonesia Tbk's operations had enough sulfur supply, and Vale remained optimistic amid the nickel price rally sparked by Indonesian production cuts.

High sulfur price hits Excelsior

High sulfur costs could also weigh on Nickel Industries' 46%-owned Excelsior nickel-cobalt project, an HPAL project in Indonesia also known as ENC.

The project is expected to ramp up to full capacity at the end of October.

"We have given some information around the effect of what an increase [--] every $100 increase in the sulfur price increases our operating cost by about $1,000," Nickel Industries CFO Chris Shepherd said during an earnings call. "That's the expectation when ENC is up and running."

Nickel Industries' sulfur inventory is expected to last until the end of September, and the company is actively exploring alternative sulfur sources, Managing Director Justin Werner said in the call.

Werner also expects higher nickel prices to help Nickel Industries withstand higher operating costs.

"While we are seeing some increasing cost pressures, we are also seeing the LME nickel price rising in step with those rising cost pressures," Werner said. "Given the integrated nature of our operations, that stands us in a much better stead than a lot of our peers."

Vale and Nickel Industries both reported higher earnings in the first quarter amid higher nickel prices.

Vale booked a 36% year-over-year increase in attributable net income to $1.89 billion in the first three months of 2026, as sales and realized prices increased for nickel and other segments. Vale Indonesia's profit also doubled year over year to $43.6 million from $21.8 million.

Nickel Industries' adjusted EBITDA rose to $135.6 million in the first quarter from $97.3 million in the year-ago period.