Nickel: looking for a route back to safety

For the past three years, the nickel market has suffered from oversupply. This is due to rapid expansion in new nickel supply in Indonesia. The market is expected to remain in oversupply until 2030. Despite this, prices have remained relatively resilient, hovering around the US$15,000/t mark or above. This changed when US tariffs were announced. 

Fill in the form to download slides from our recent presentation at the Future Facing Commodities Forum, for further details on the outlook for nickel.  

Nickel supply and demand driven by Asia 

China and Indonesia are driving demand in both supply and demand of nickel.  

Nickel supply from China and Indonesia has averaged 15-20% growth a year since 2019 whereas supply from the rest of the world has shrunk by around 5% a year over the same period. While global demand has failed to keep up with supply, this too is polarised between China and Indonesia – up an average of 11% a year since 2019 – and the rest of the world, where demand has contracted in every year of that period except 2021 and 2024. 

EV switch to LFPs 

The rising demand for electric vehicles and efforts to improve supply chain sustainability was one of the main drivers behind the expansion of nickel supply. But this once much-vaunted demand for nickel batteries has now been dented by major improvements in the cost, performance and longevity of lithium iron phosphate (LFP) batteries. This has prompted many consumers in both energy storage and EVs to review their choice of battery. 

In China, LFP already dominates EV battery production, whereas in Europe and the US there has been a noticeable decrease because the LFP batteries have undermined demand for nickel-based batteries. ​ 

In 2020, 55% of battery CAM chemistry share was nickel-based. By 2030, this is expected to be reversed with non-nickel-based chemistries exceeding 55% of battery shares. 

The global nickel surplus is mostly in Class I metal and nickel sulphate, while Class II (including NPI) is returning to balance.  

• Class I nickel: Tight supply outside China supported prices in 2021–2022. However, by 2024 the market had shifted to oversupply as China ramped up nickel metal production to feed exchange stocks. 

• Class II nickel: Indonesia's surge in NPI and sustained imports ofFeNi from outside China caused oversupply in China during 2022–2023. But with many global FeNi producers closing and Chinese stainless output still growing, the market is tightening. 

• Nickel sulphate: The market entered oversupply in 2023 as Indonesia expanded its supply of battery-grade intermediates-for-sulphate just as Chinese battery demand weakened. Surplus sulphate is now being further refined into Class I nickel for delivery to London Metal Exchange (LME). 

Outlook for stainless steel production  

Global stainless steel production is forecast to grow steadily by 4-5% annually through 2025-2027, reaching approximately 71 million tonnes by 2027. This growth is driven by China, India and Indonesia, with the former remaining the dominant force despite low prices and weak user demand. Consolidation in Chinese stainless production is looking increasingly likely with many producers cutting production as the two leading companies, Tsingshan and Tisco have continued to ramp up production. However, uncertainties remain:  

• Will scrap usage increase?  

• How much of the planned new melting capacity will come online? 

Throughout the rest of Asia, stainless output is projected to increase by around 6% by 2027. India will be a significant contributor, while South Korea is expected to recover following damage caused by the typhoon in 2022. Japan, however, is likely to maintain output of around 2.2 million tonnes per year. 

In Europe, earlier forecasts of 8% growth now appear optimistic. Growth is likely if there is no further industrial action at major producers Acerinox and Outokumpu, but nickel consumption will be boosted by some European mills continuing to use NPI in place of stainless steel scrap.  

US tariffs create confusion 

Announcements on new ore benchmark pricing in Indonesia and an export ban by the Philippines, pushed up nickel prices temporarily in 2025 - but the new US trade tariffs have thrown all markets into confusion. The wide-ranging import tariffs have had a double effect: their announcement weakened the US dollar which boosted base metal prices; but their subsequent enactment triggered rapid declines in both. 

As the US imports 52% of its Class 1 nickel from Canada, the tariffs could have a serious impact on US nickel consumers although US-based stainless steel producers could benefit from tariff-bearing prices on stainless imported from Asia.  

Learn more 

Fill in the form at the top of the page to download our slides on the nickel outlook from our recent Future Facing Commodities Forum presentation.