China and Indonesia are both set to cut nickel output as producers look to limit losses from a drawn-out slump in market prices for the metal.

The two nations, which together produce 70% of the world’s nickel supply, will likely reduce output by at least 100,000 tonnes (t) this year, Reuters reports. Traders and analysts said that further cuts could come if producers want to remove the surplus of nickel in the market and boost prices.

Prices for the metal surged at the start of 2022, rising more than 250% as fears over supply spread immediately after Russia, a major nickel producer, invaded Ukraine. Average prices for nickel in the first half of the year were $27,858/t. At their peak in March, they hit $48,201/t, the highest in more than a decade.

However, surplus global supply, driven largely by a ramp-up of production from Indonesia, which accounted for more than half of the world’s mined ore last year, has caused prices to slump to around $26,000/t.

Western miners such as BHP and Glencore have since delayed projects, reduced production or abandoned their nickel businesses altogether as they look to recover losses from the ongoing price decline.

Earlier this week, Glencore announced that it plans to sell its entire stake in the Koniambo Nickel SAS joint venture in New Caledonia, citing “unsustainable” operations at the plant, which has never managed to turn a profit in its decade of production despite bailouts and rescue efforts from the French Government.

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So far, cuts have removed more than 230,000t, or approximately 6% of supply, for this year, but analysts say this has not been enough to boost prices.

An anonymous source at a major global producer told Reuters that even deeper reductions would be needed to prevent financial losses for nickel miners.

Much of the oversupply of the metal, which is used to make stainless steel and in energy transition technologies like electric vehicles, is in nickel pig iron (NPI), a cheaper type of low-grade ore used mostly for steelmaking. Many NPI mills in China have become unprofitable because prices are so low, falling to around $11,000/t.