Reuters reported that China's Tsingshan Holding Group Co had signed a deal with Huayou Cobalt to supply 60,000 tonnes of nickel matte per year.
Tsingshan has been testing the production of nickel matte, which can be converted into battery grade nickel, and said it would invest heavily in Indonesia to boost production.
Bloomberg reported that nickel lost as much as 7.7%, the most since 2016. Cash nickel closed 6.7% lower at US$17,369 per tonne. Zinc lost more than 2%.
Precious metals were also sold off, with gold dropping as low as $1699.40 an ounce.
Gold exchange-traded fund holdings fell and US Treasury yields rose, while rising yields also weighed on US stocks, which were down 1.3%.
At midweek, Oil was up another 2.6% to $61.28 a barrel.