Australia-listed Nickel Industries says nickel producers in the Indonesia Morowali Industrial Park (IMIP), a key production base for the metal, will coordinate on output cuts as Chinese operators weigh steep reductions.

"There will be coordinated cuts across all of the operations within the IMIP," MD Justin Werner told analysts on an earnings call, without giving a percentage. "Certainly what we're seeing is the non-integrated producers ... are the ones that are going to suffer the hardest here."

Nickel Industries owns a 10% stake alongside China's Huayou Cobalt in the Huayue nickel and cobalt project in the IMIP on the island of Sulawesi. It also counts nickel giant Tsingshan Group as a major shareholder.

Chinese producers are considering coordinated production cuts following a meeting earlier this week, people familiar with the matter said, but they have not decided on the size or duration of any reductions.

Companies are weighing halving production of mixed hydroxide precipitate (MHP), an intermediate product used to make chemicals for electric vehicle batteries, according to three sources.

Senior executives are also weighing cutting output of nickel pig iron (NPI), a stainless steel raw material, by 20%, said two of the sources and another two people familiar with the matter.

Indonesia, the world's largest nickel producer, accounted for about two-thirds of global mined output in 2025, according to the US Geological Survey, so coordinated cuts by its Chinese operators could tighten supply of both battery materials and stainless steel feedstock as prices fall.

The duration and volumes affected by any cuts remain unclear, the people said, as executives review output data for this year and consult shareholders of the projects.

It also remains unclear whether proposed cuts would take into account reductions already underway across the industry for months, one trading source said.

Companies involved include Tsingshan, Huayou, CNGR Advanced Material, Lygend Resources and GEM, according to the people, who spoke on condition of anonymity because they were not authorised to discuss the matter publicly.

The companies did not immediately respond to requests for comment.

Bloomberg first reported plans for Tuesday's meeting. Nickel on the London Metal Exchange jumped 3.7% on Wednesday following the report.

Nickel Industries itself has reduced its Indonesian NPI production to 75% of capacity this month and delayed the full ramp-up of another nickel and cobalt project due to a lack of rainfall linked to El Niño, Werner said.

Producers also face slumping nickel prices and rising production costs amid sulphur shortages and tighter Indonesian nickel ore mining quotas.

Nickel fell nearly 25% from this year's $20 000-a-ton peak to $15 070 last week, its lowest since December 2025. NPI prices have also fallen, reaching 1 009 yuan ($151) per nickel unit on Wednesday from more than 1 100 yuan in early September.

The sulphur squeeze already prompted an MHP production cut earlier this year.