What's Dragging Down Nickels? Why 2026 Looks Even Tougher for the Metal

Throughout 2025, nickels remained trapped in a narrow range around US$15,000 per metric ton, failing to generate meaningful upside despite market participants’ hopes for recovery. This lacklustre performance reflects deeper structural challenges that extend well beyond simple price fluctuations—and most analysts see these headwinds persisting into 2026.

The Indonesian Supply Paradox

Indonesia’s dominance in global nickel production has become the metal’s double-edged sword. The country supplied 2.2 million MT of nickels in 2024, dwarfing its own output of just 800,000 MT five years earlier. This explosive expansion was supposed to democratize battery production, but instead flooded the market with oversupply.

In February 2025, Indonesia’s government raised ore extraction quotas to 298.5 million wet metric tons, climbing from 271 million WMT the previous year. The stated goal was to ease supply pressures, yet the opposite occurred—warehouses swelled with inventory. By November 2025, London Metal Exchange stockpiles hit 254,364 MT, up sharply from 164,028 MT at year’s start. Prices subsequently plunged to US$14,295, squeezing even low-cost Indonesian smelters’ profit margins.

This squeeze has sparked speculation about production cuts. According to market sources, Indonesia may target around 250 million MT of ore output for 2026—a notable pullback from the 379 million WMT initially planned for 2025. However, officials are still deliberating, and final targets remain uncertain. Strategists like Ewa Manthey at ING cautiously note that even with cuts, the global nickels market is forecast to hold a 261,000 MT surplus in 2026, suggesting that modest production adjustments alone won’t rebalance fundamentals.

Complicating the outlook are new Indonesian policies introduced throughout 2025. A dynamic royalty structure implemented in April now charges 14-18 percent based on nickels prices rather than a flat 10 percent rate. Later, mining license validity periods were cut from three years to one, granting the government tighter production oversight. These policy shifts suggest Indonesia may gradually moderate supply, though the timeline remains ambiguous.

Demand Destruction on Multiple Fronts

The nickels market faces headwinds far beyond oversupply. Stainless steel—which consumes over 60 percent of global nickels—depends heavily on China’s property sector, and that market remains severely depressed. November 2025 housing sales slid 36 percent year-on-year, extending a broader 19 percent decline through the first eleven months. Despite government stabilization efforts in 2024-2025, the property collapse of 2020 continues to weigh on industrial demand.

Equally troubling is the erosion of nickels’ role in battery chemistry. For years, nickel-manganese-cobalt formulations dominated EV production due to superior energy density and range. Yet lithium-iron-phosphate (LFP) technology has rapidly matured, with modern LFP vehicles now achieving ranges exceeding 750 kilometers while offering cost and safety advantages. Battery maker Contemporary Amperex Technology exemplifies this shift—the company has increasingly adopted LFP chemistries, reducing reliance on nickels.

Market data from December 2025 illustrated this transition: nickel battery demand grew just 1 percent year-on-year in September, while LFP demand surged 7 percent. Western markets still favor nickel chemistry, but even that support is cracking. The US eliminated its EV tax credit in September 2025, triggering a 46 percent sequential drop in American EV sales by Q4 compared to Q3, and a 37 percent year-over-year decline. Carmakers responded swiftly—Ford scaled back EV investments with a US$19.5 billion writedown, prioritizing extended-range hybrids instead. The European Union simultaneously abandoned its 2035 internal combustion engine ban, signalling diminished commitment to rapid electrification.

The 2026 Nickels Outlook: Limited Relief in Sight

These converging pressures leave little room for nickels recovery next year. ING’s Manthey forecasts prices will struggle to sustain above US$16,000 given persistent surplus conditions, with upside dependent only on unexpected supply disruptions or unexpectedly robust stainless and battery demand. She expects average nickels prices of US$15,250 in 2026—aligned with the World Bank’s projection of US$15,500, potentially rising modestly to US$16,000 by 2027.

For substantial repricing to occur, supply cuts would need to be both coordinated and dramatic—erasing hundreds of thousands of metric tons to alter market fundamentals. Even then, investor confidence would likely demand sustained prices above US$20,000 to attract producer interest. Without such action, nickels appear destined to remain under pressure throughout 2026, with both supply-side and demand-side factors working against price appreciation in the near term.