US-Indonesia deal threatens China’s ‘entrenched position’ in nickel market: analysts
South China Morning Post
by Kandy WongFebruary 24, 2026
AI-Generated Deep Dive Summary
The United States finalized a deal with Indonesia on Thursday, granting America unrestricted access to the Southeast Asian nation's industrial commodities, including nickel. This agreement has the potential to reshape the global supply chain for nickel, a critical metal used in electric vehicle batteries and stainless steel production. Analysts suggest that while China currently holds an entrenched position in the nickel market, the US-Indonesia partnership could challenge this dominance, forcing China to accelerate investments in alternative nickel sources and strengthen its role across the metal's supply chain.
Nickel is a vital component for the global transition to renewable energy, particularly in electric vehicles and battery storage systems. Indonesia is the world's largest producer of nickel, with significant reserves that have long been courted by major powers. The US-Indonesia agreement aims to secure American access to this resource, reducing reliance on China, which has traditionally been a key player in nickel trade and processing. This move could mark a significant shift in global supply dynamics, potentially altering the balance of power in the electric vehicle industry.
While the deal presents opportunities for the United States to diversify its nickel supplies, it also introduces new complexities. The recent ruling by the US Supreme Court on tariffs adds some uncertainty to US-Indonesia trade relations. However, experts believe that the long-term implications of this agreement could be far-reaching, not only for nickel but also for broader geopolitical and economic strategies. The agreement underscores the growing competition over critical minerals, particularly as global demand for clean energy technologies accelerates.
For China, which has been a dominant force in the nickel market, the US-Indonesia deal represents both a challenge and an incentive to adapt. Analysts predict that China will respond by expanding its investments in alternative nickel sources and enhancing its influence across the supply chain. This could lead to a more fragmented global nickel market, with major powers vying for control over resources to support their industrial and technological ambitions.
The agreement also highlights the broader geopolitical implications of resource competition. As countries seek to secure access to critical minerals, traditional trade dynamics may shift
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Originally published on South China Morning Post on 2/24/2026