Global Nickel Market — TradingView News

1. Energy Transition Continues to Drive Demand Growth

Global nickel demand remains steady growth. According to data from the International Nickel Study Group (INSG), global nickel demand reached 3.35 million tons in 2024, representing a year-on-year increase of approximately 5.4%. This growth rate is broadly in line with the 5.9% compound annual growth rate over the past decade. According to the International Energy Agency (IEA), global demand is projected to reach 5.69 million to 7.08 million metric tons by 2040.

Structural changes as primary drivers of nickel demand growth. According to Wood Mackenzie's calculations, in 2024, stainless steel remained the largest consumer of nickel, accounting for approximately 64% of total demand; battery demand accounted for approximately 16%; and non-ferrous alloys and electroplating accounted for 8% and 6%, respectively. The increase in demand mainly comes from the energy transition, with the share of power battery demand expected to rise significantly to 42% to 58% by 2040.

Nickel demand is shifting from cyclical to growth-oriented. The above structural changes are causing fundamental changes in the volatility characteristics of nickel demand. Historically, nickel demand has been closely linked to traditional industries such as stainless steel, exhibiting strong cyclicality. However, as nickel demand growth becomes increasingly tied to the penetration of electric vehicles, renewable energy capacity, and the pace of energy storage infrastructure development, its sensitivity to traditional industrial cycles is gradually decreasing, enhancing the long-term growth certainty. This implies that the focus of factors influencing nickel price fluctuations is shifting further toward the supply side.

Battery technology evolution introduces uncertainty for nickel demand, but this may already be fully priced in. In particular, the rise of lithium iron phosphate (LFP) batteries, which do not contain nickel, poses a challenge to nickel's application in the electric vehicle sector. According to IEA data, LFP batteries' share of the global EV battery market has surged from less than 10% in 2020 to nearly 50%, with a penetration rate in the Chinese market approaching 70%. On the other hand, high-nickel batteries (such as NMC and NCA) will continue to occupy an important position in the market due to their energy density advantages. The evolution of battery chemistry is an ongoing process, and the short-term suppression of nickel demand caused by the rise in LFP battery market share may have already reached its peak.

Grade differentiation in the nickel market. The growing demand for high-purity Class I nickel in electric vehicle batteries is driving further segmentation in the nickel market. Traditional applications such as stainless steel typically use secondary nickel (e.g., nickel-iron NPI, nickel-based iron alloys). As demand for Class I nickel surges with the growth of electric vehicles, the supply-demand balance for Class I nickel may become tighter than that for secondary nickel, forming a dual-track market, with battery-grade nickel potentially commanding higher premiums. Countries such as Indonesia are working to convert traditional laterite nickel ore resources used to produce secondary nickel into intermediate products or primary nickel products suitable for batteries through processes such as high-pressure acid leaching (HPAL), reflecting this market trend.

2. Short-term Supply Slightly Excessive, but Potential Bottlenecks Are Emerging

Rapid supply release led to price declines. The nickel market has shown similarities to the lithium market over the past two years, though on a much more moderate scale. Rapid expansion on the supply side, particularly driven by major producing countries like Indonesia, has caused global nickel supply growth to outpace demand growth. The IEA estimates that global mine nickel supply increased from 3.6 million metric tons in 2023 to 3.9 million metric tons in 2024, a nearly 10% rise. This imbalance put downward pressure on nickel prices in 2024, with LME nickel futures prices falling by approximately 10% for the year and returning to pre-COVID-19 levels; the market remained weak in early 2025.

Structural changes in the market raise bottleneck concerns. Nornickel estimates that the global nickel market surplus in 2024 was approximately 150,000 tons, which is not particularly significant. From a medium- to long-term perspective, there are potential factors that could create new bottlenecks across multiple links in the supply chain, including Indonesia's policies, declining exploration spending, high concentration of refining capacity, and supply chain fragmentations. I expect that the supply-demand dynamics of the nickel market will be more favorable than those of other traditional battery minerals such as lithium, cobalt, and graphite over the medium term (2-3 years).

3. Potential Bottleneck #1: The Indonesia Factor

Indonesia dominates global mine-based nickel production. Since 2015, Indonesia's mine-based nickel production has increased by 16 times, accounting for approximately 70% of global production in 2024. China's significant investment in nickel processing facilities in Indonesia has been a key driver of this growth. This rapid supply response, particularly from Indonesian laterite nickel mines (which primarily produce secondary nickel or intermediates such as nickel iron and nickel matte), demonstrates that under adequate investment and relatively lenient regulatory conditions, specific nickel product categories can be brought to market relatively quickly. However, it is worth noting that this expansion is primarily concentrated in secondary nickel or intermediate products that require further high-energy-consuming processing (such as HPAL or RKEF conversion to nickel matte) to be transformed into battery-grade primary nickel. This results in an overall adequate supply of nickel on one hand, but on the other hand, battery-grade nickel supply may remain constrained if the LFP substitution process slows down.

The direction of Indonesia's downstreaming policy is a key variable. Indonesia's resource nationalism policies (such as export bans and processing requirements) have made it an important destabilizing factor in the global nickel market. The nickel ore export ban implemented by Indonesia in 2020 successfully attracted downstream investment to its domestic market, making it the world's largest nickel producer. However, recent signals such as reducing mining quotas, suspending the construction of new RKEF smelters, and plans to increase mining rights fees indicate that the country is attempting to balance resource consumption and value maximization. These policy shifts could significantly impact global supply volumes and costs, creating potential supply bottlenecks.

4. Potential Bottleneck #2: Highly Concentrated Refining Capacity

Geographically concentrated in Indonesia, China, and Russia. The global distribution of nickel refining capacity is highly concentrated, with a trend toward further concentration in recent years, which undoubtedly increases the vulnerability of the global nickel supply chain. Between 2020 and 2024, the combined market share of the top three refining producers increased from 60% to 80%. Indonesia accounts for approximately 43%, and China accounts for approximately 30%. Meanwhile, Indonesia is also the leading contributor to new nickel refining capacity globally. Based on existing project pipelines, it is estimated that Indonesia's share of global nickel refining capacity will surge to 67% by 2030.

Geographical concentration overlaps with ownership concentration. IEA data shows that Chinese companies own the vast majority of Indonesia's nickel refining assets. If calculated by ownership, China controls 65% of global refined nickel production, while its domestic geographical share is only 30%. This means that even if nickel mining operations are somewhat dispersed, the critical bottleneck of refining remains highly concentrated and significantly influenced by Chinese capital and technology.

Double gatekeeper effect. The direct consequence of this high concentration is that the global nickel market is extremely sensitive to any supply disruptions from these dominant countries (whether in terms of Indonesia's geographic production capacity or China's capital-controlled production capacity). The IEA's N-1 assessment shows that if the largest nickel supplier (Indonesia by geography and China by ownership) were to experience a supply disruption, the remaining global supply would only meet about half of other countries' demand. This figure clearly quantifies the vulnerability of the global market. If the supply of battery-grade nickel sulfate (mainly from China) were also disrupted at the same time, this proportion would be even lower. This high degree of dependence makes downstream industries, particularly the battery manufacturing industry, extremely vulnerable to price shocks and supply disruptions.

5. Potential Bottleneck #3: Declining Exploration Spending

Nickel exploration has cooled more significantly than most other critical minerals. In 2024, investment momentum in the critical minerals sector weakened notably, with total spending growing by only 5%, far below the 14% increase in 2023; after adjusting for inflation, real investment growth was just 2%. Nickel is one of the minerals most significantly affected by this trend. Nickel exploration spending saw a significant decline in 2024, contrasting with the continued increase in exploration spending for lithium, uranium, and copper. Current price signals are exerting a decisive negative impact on the development of early-stage projects. The contraction in exploration suggests that when future demand eventually exceeds existing supply capacity, the response time for new diversified production capacity will be significantly extended, leading to more prolonged market tightness and higher price volatility.

Specialized nickel producers face particularly severe challenges. At current prices, approximately 80% of such producers had production costs higher than the nickel price in 2024, resulting in losses. This cost disadvantage, combined with price uncertainty, makes financing new projects extremely difficult. An analysis of 25 mining companies by the IEA shows that while diversified large-scale miners increased their capital expenditures by approximately 15% in 2024, specialized producers (including some nickel producers) reduced their investments by 15%. It is worth noting that China's major mining companies, which had previously seen sustained investment growth, also saw a 35% decline in capital expenditure in 2024.

6. Potential Bottleneck #4: Fragmented Supply Chain

Indonesian export restrictions. As the world's largest nickel producer, Indonesia's policies have a profound impact on the market. The country imposed a ban on nickel ore exports in 2020, aiming to force downstream processing industries to develop domestically. This has successfully attracted significant foreign investment in smelters but also triggered a trade dispute with the EU at the WTO. In August 2024, Indonesia suspended approvals for new RKEF smelters to protect high-grade ore reserves and alleviate pressure on the midstream sector. In March 2025, Indonesia announced plans to increase mining rights fees for nickel ore, nickel concentrate, and nickel iron, which could raise production costs. Additionally, Indonesia introduced foreign exchange retention regulations in February 2025, requiring that foreign exchange earnings from natural resource exports, including minerals, be held in the domestic financial system for 12 months.

Other producing countries. The Philippines, an important nickel ore supplier, is also considering similar resource nationalism policies. In February 2025, the Philippine Senate passed a bill proposing a five-year ban on nickel ore exports to encourage domestic downstream industry development. The bill is currently under review. Other countries have also taken similar measures, such as Zimbabwe banning the export of raw lithium and the Democratic Republic of the Congo temporarily suspending cobalt exports to address price declines. These actions reflect the broader trend among resource-rich nations to enhance their position within the global value chain.

The scope of export controls is expanding from raw materials themselves to processing technologies. For example, China's proposed export controls on LFP and lithium refining technologies could significantly increase the difficulty for other countries to develop independent nickel refining capabilities if similar measures are applied to advanced nickel processing technologies (such as HPAL, high-grade nickel matte, and nickel sulfate production technologies) in the future. This would make intellectual property and technological autonomy as important as access to raw materials.

Domestication policies of consumer countries. The United States aims to promote friend-shoring and domestication of supply chains by offering tax credits for electric vehicles assembled in North America whose batteries meet specific critical mineral and component sourcing requirements. It also supports domestic critical mineral projects and processing capacity building through programs such as the U.S. Export-Import Bank's (EXIM) Supply Chain Resilience Program and dedicated funds from the Department of Defense and the International Development Finance Corporation (DFC). The EU has set targets through the Critical Raw Materials Act (CRMA) for EU-sourced strategic raw materials to meet 10%, 40%, and 25% of annual EU consumption by 2030 for mining, processing, and recycling, respectively. The EU has also designated strategic projects to provide eligible projects with fast-track approval, financing facilities, and off-take support to accelerate the development of domestic supply chains. While these measures will promote supply chain diversification in the long term, considering the development cycle, they will actually increase the cost of global nickel circulation in the medium term.

7. Investment Impact

Mid-to-long-term investment window. As mentioned above, the global nickel market is currently in a cyclical trough, primarily due to supply growth outpacing short-term demand. From a mid-to-long-term investment perspective, this phase may present an opportunity for investors to position themselves in high-quality nickel assets. Nickel prices are expected to rebound cyclically in the future, driven by strong long-term demand and potential supply constraints. According to estimates based on data from multiple listed companies, the current EV/resource ratio for hydrometallurgical nickel projects averages around USD 5080 per ton, significantly lower than lithium mines (generally above USD 200 per ton), indicating valuation recovery potential for nickel-related assets in the secondary market.

More defensiveness in portfolio allocation. The following three categories of listed companies are worth paying attention to: (1) Companies with overseas nickel resources, benefiting from resource valuation recovery; (2) Companies with high-purity nickel sulfate production capabilities, benefiting from the growth in battery-grade nickel demand; and (3) Companies with an integrated layout from nickel mining to battery material production, better able to cope with supply chain volatility risks and capture value across the entire industrial chain. At the same time, to address the special risk factors on both the supply and demand sides of the nickel market, the following two types of stocks offer more defensiveness: (1) Local joint ventures, which avoid policy risks in the countries where the projects are located; (2) HPAL wet process companies, whose products can be used for both NCM and LFP battery nickel source demand.