Nickel has emerged as an unlikely bright spot in the base metals space. Not because of the Middle East hostilities but because Indonesia is reining in its nickel industry.

To be sure, the squeeze on sulphur supplies out of the Middle East is not helpful to laterite nickel producers like Indonesia. So the Indonesian industry  – it produces about 23% of the global supply  – could be hit by sulphuric acid shortages, a positive for the nickel price.

Another positive for the nickel price is the potential for the average Joe deciding that in light of the events in the Middle East, it’s time to take the plunge and buy an electric vehicle, with batteries in EV’s being nickel’s growth driver on top of its main use in stainless steel.

But the above positives are not what has been driving nickel prices higher. The price has moved up from its CY2025 average of US$15,162/t to US$17,693/t (LME 3-month). The current price is not hip, hip hooray stuff for ASX nickel stocks.

But it’s getting there, with the full impact of the tailwind that has pushed prices up from last year’s average yet to materialise – the potential for the nickel market to move into a supply deficit – or at least a market balance -because of the actions of Indonesian authorities.

In actions reminiscent of China’s anti-involution push to stop destructive over-supply in key industries, Indonesia has choked back through quotas on the amount of laterite ore that can be processed, effectively reducing capacity utilisation rates down to 70-75% this year.

Macquarie’s commodity desk suspects the aim is to cut annual production by 10%.

“We had previously thought that overall final nickel production would still rise year-on-year (from 2.5mt last year to 2.6mt this year),” Macquarie said.

“We now think production may not rise at all and this could lead to a balanced market for the year as a whole versus our previous forecast of a surplus of 90,000t,” Macquarie said.

All that is good news for BHP which is working on off-loading its Nickel West division, most likely in  bits and pieces. No company or trader will base a decision on picking up Nickel West assets on the nickel price recovery year-to-date.

But the suggestion that at least a balanced market is in the offing, and that Indonesia wants higher not lower prices for its laterite nickel industry built with the help of the Chinese, could encourage would-be buyers to pony up.

Today’s interest though is Centaurus (ASX:CTM), a leveraged play on the nickel price. Its shares have caught the tailwind provided by Indonesia to rise from 43c at the start of the year to 54.5c in Thursday’s market.

It owns the 1.2Mt Jaguar sulphide nickel project in Brazil’s Carajas region. But for financing, Jaguar is shovel ready as a future producer of 22,700tpa of contained nickel at first quartile costs.

Just as the Indonesian-inspired nickel price run could help BHP in its Nickel West sales process, Centaurus stands to benefit in its strategic partnering and offtake process needed to support a final investment decision on a development.

Standard Chartered is on the case and the company reported recently that the preferred equity funding path for Jaguar remains a sell-down of equity at the project level with a partner that requires access to a long-term, low-cost supply of high-quality nickel sulphide concentrate.

From a debt perspective, the company continues its discussions with the Brazil National Development Bank to access their preferential critical mineral loan programs.

Sunstone (ASX:STM):

Like the rest of the junior mining sector, it is a case of heads down and bums up for Sunstone (ASX:STM) while the broader market remains distracted by the missiles raining down in the Middle East.

It is approaching what should be a major re-rating event – the release in the coming quarter of a scoping study in to its 3.6Moz gold equivalent and growing Bramaderos gold/copper project in southern Ecuador.

The study will provide the first hard numbers on the production potential of the project and its value at a time of near record gold and copper prices. Suffice to say the likely value is many multiples of Sunstone’s $92m market cap at 40.5c a share in Thursday’s market.

Sunstone has RBC Capital markets on board as its financial advisor on its previously disclosed partnership discussions  “regarding potential corporate transactions as part of Sunstone’s strategy to unlock the substantial value of its two world-class projects (including the El Palmar project in the north of the country)”.

Pioneer Minerals (PMM):

It was mentioned here back in May 2024 that China’s control of the tungsten market was a worry for the non-China world and that Australia had a national champion in the strategic metal, EQ Resources (ASX:EQR).

EQR was trading at 5.5c for a $102m market cap at the time which was not a lot for a company on a pathway to becoming the biggest tungsten producer ex-China from its Mt Carbine mine in Queensland and its then recently acquired operation in Spain.

Sure enough China has since pulled the tungsten supply trigger in retaliation to the Trump administration’s  tariff assault at a time when the administration has also been telling its friends that they needed to jack up their defence spending.

Now war has broken out in the Middle East.

Tungsten has the highest melting point of all metals (3410°C), and being the hardest of all metals, it has wide-ranging uses wide-ranging uses in the defence and aerospace industries, mining equipment, construction and the automotive industry, among others.

 A particular use at the pointing end of missiles has come in to sharp focus since the US-Israel attack on Iran. But there is no supply from China, or very little of it.

The result is that the tungsten price has gone ballistic, taking off from a long run  price of US$300-US$350 a metric tonne unit to more than US$2,400/mtu.

There is no surprise then that EQ has raced off to 34c on an expanded issued capital base to now sport a $1.7 billion market cap.

And there is also no surprise that interest in ASX tungsten explorers has taken off. Historic tungsten (antimony and gold) operations in a corner of Idaho in the US has become a favourite stomping ground.

It is where Canada’s C$5.4 billion Perpetua is developing its Stibnite Gold project, more for the gold than the antimony (stibnite), with the tungsten have being mined out in years gone by.

For a company like Resolution Minerals (ASX:RML) which neighbours the Perpetua project it has been a rewarding exercise in Idaho, with its market cap growing from $5 million a year ago to $107m.

A more recent entrant to Idaho is Pioneer Minerals (ASX:PMM) which has three focus areas in the same neck of the woods as Perpetua and RML. Its flagship project there is Springfield which was a tungsten producer in the 1950s.

It has been busy doing all the things that need to be done in the lead up to testing its projects for their big time tungsten potential, along with antimony and gold.

It was trading in Thursday’s market at 20c for a $14m market cap which is not a lot for any type of exploder nowadays.

Pioneer also has an interesting uranium project in Colorado which is being prepared for drilling, and two lithium projects in Ontario which will be reawakened should the lithium recovery continue.