## What's Holding Back Nickel Price Recovery in 2026? A Deep Dive Into Market Fundamentals

The nickel market faces a challenging year ahead. While prices hovered around US$15,000 per metric ton throughout 2025, forecasts for 2026 paint a similarly grim picture. ING's commodities strategist Ewa Manthey projects an average nickel price of US$15,250, with the World Bank estimating US$15,500—figures that underscore the metal's struggle against mounting headwinds. Understanding what's weighing on nickel requires examining both the supply explosion and the faltering demand side of the equation.

### The Indonesian Production Paradox: Supply That Won't Stop

Indonesia's dominance in global nickel production has become both a blessing and a curse for the market. The nation produced 2.2 million metric tons in 2024—nearly three times the 800,000 MT it extracted in 2019. This rapid scaling was turbocharged by increasing quotas: the February 2025 policy shift bumped nickel ore output allowances to 298.5 million wet metric tons from 271 million WMT in 2024.

The consequence? A nickel price chart telling a story of sustained weakness. LME warehouse stockpiles ballooned to 254,364 MT by late November, up sharply from 164,028 MT at year-start. Prices even dipped to US$14,295—dangerously close to the break-even point for Indonesia's lowest-cost producers. This profitability squeeze may finally force action. Reports suggest the Indonesian government is considering trimming ore output to around 250 million MT in 2026, down from 379 million WMT in 2025. However, such reductions remain uncertain and subject to ongoing negotiations.

Even if cuts materialize, they may prove insufficient. The global nickel market is projected to remain in surplus by approximately 261,000 MT in 2026. To materially shift this balance and push prices toward the US$19,000-US$20,000 range that western producers need, cuts would need to reach "hundreds of thousands of MT"—a scale that seems unrealistic without coordinated international action.

Adding complexity to Indonesia's calculus are policy shifts implemented in 2025. April saw a shift from flat 10% royalties to a dynamic 14-18% rate tied to nickel prices. October brought stricter oversight, cutting mining license validity from three years to one. These measures give Jakarta more control but create uncertainty for producers weighing investment decisions.

### Demand Weakness: The Stainless Steel Drag and EV Chemistry Shift

If oversupply weren't enough, nickel demand remains muted across its two largest use cases. Stainless steel production—which accounts for over 60% of global nickel consumption—has stalled due to China's prolonged property crisis. Despite government stabilization efforts throughout 2024 and 2025, Chinese residential sales fell 36% year-on-year in November, with cumulative 2025 declines of 19% through the first 11 months. This Chinese housing malfunction has gutted stainless steel demand and, by extension, nickel offtake.

The EV battery sector tells an equally troubling tale, though for different reasons. While nickel production expanded rapidly over the past five years to fuel battery demand, the chemistry landscape has shifted dramatically. Lithium-iron-phosphate (LFP) batteries—once dismissed as inferior—have closed the energy density and range gap with nickel-manganese-cobalt chemistry. Contemporary Amperex Technology (SZSE:300750, HKEX:3750), one of the world's largest battery makers, has pivoted aggressively toward LFP. Modern LFP vehicles now achieve ranges exceeding 750 kilometers while offering production cost advantages and superior thermal safety.

The numbers reflect this transition: nickel battery demand rose just 1% year-on-year in September 2024, while LFP demand surged 7%. Though Reuters notes that most nickel battery growth still stems from rapid overall EV market expansion rather than chemistry preference, headwinds are intensifying. The elimination of the US EV tax credit in September cratered American demand—Q4 2025 EV sales dropped 46% versus Q3 and 37% year-on-year, despite hitting 1.2 million vehicles in the first nine months. Ford (NASDAQ:F) took a US$19.5 billion writedown and is scaling back pure electric models in favor of hybrids and extended-range variants. Simultaneously, the EU abandoned its 2035 ban on internal combustion engines.

These policy reversals cloud the energy transition narrative that underpinned nickel demand growth assumptions. "Any slowdown in energy transition policies adds to bearish sentiment for battery metals, including nickel," Manthey noted.

### The 2026 Nickel Price Outlook: Caution Prevails

Synthesizing supply and demand trends, forecasters see limited upside for nickel prices in 2026. Manthey's baseline calls for prices to struggle holding above US$16,000, averaging US$15,250 across the year. This aligns with World Bank projections of US$15,500 in 2026, potentially rising modestly to US$16,000 in 2027. Russia's Nornickel—itself one of the world's largest nickel producers—projects a 275,000 MT market surplus in refined nickel for 2026.

Upside scenarios hinge on unexpected disruptions or stronger-than-forecast demand from stainless steel and batteries. Yet even optimistic analysts acknowledge that sustained prices above US$19,000 appear unlikely under current market structure. The surplus persists, Chinese real estate remains sluggish, and EV policy momentum has stalled globally.

For nickel producers and investors, 2026 appears positioned as another year of testing profitability and patience. Without a fundamental shift—whether via coordinated supply discipline, a genuine Chinese property recovery, or a renewed policy commitment to energy transition—the outlook remains decidedly bearish.