Nickel Prices Expected to Stay Rangebound in 2025 Amid Supply Surplus
The nickel market, which heavily relies on demand from the stainless steel and electric vehicle (EV) sectors, is proving to be challenging to forecast due to its volatility. After a significant spike in 2022 triggered by geopolitical events, nickel prices have since stabilized but remain sensitive to shifts in market conditions.
Nickel demand is closely tied to two key sectors: stainless steel and lithium-ion batteries for EVs. Nickel is a crucial component in lithium-ion batteries, particularly in high-nickel chemistries like nickel-cobalt-manganese (NCM) and nickel-cobalt-aluminum (NCA), which provide extended range and performance in EVs. As EV adoption rises, so does the demand for nickel, which directly impacts its pricing. Likewise, nickel is essential in enhancing the strength and corrosion resistance of stainless steel, making fluctuations in stainless steel demand another significant influence on nickel prices.
In 2025, global nickel supply is expected to increase by 7.4%, reaching approximately 3.65 million metric tons. This growth is largely driven by Indonesia, the leading global supplier, which plans to expand its production of both low-grade nickel pig iron and high-grade nickel. Global nickel demand is projected to hit 3.55 million metric tons in 2025, with stainless steel production remaining the dominant driver, accounting for over 60% of total demand. The EV sector is also expected to see a significant rise, with demand for nickel in EV batteries forecasted to grow by 27%.
The International Nickel Study Group (INSG) forecasts a surplus of around 135,000 metric tons in 2025, narrowing from the surplus in 2024. By 2026, a potential deficit of 560,000 metric tons could emerge as demand continues to grow, driven largely by the EV sector.
Indonesia’s role remains pivotal, but recent supply chain disruptions and mining quotas may affect its output. In response to oversupply and declining prices, major producers like BHP have scaled back operations, reflecting the broader challenges in the nickel industry amid a two-year price slump.
Given the expected surplus in 2025, nickel prices are likely to remain rangebound. However, an unexpected surge in EV demand could potentially shift the market into a new uptrend. The probability of nickel prices staying within a narrow range is estimated at 80%, but this could change dramatically if EV adoption exceeds expectations.
