The global nickel market surplus reached 108,000 tonnes in the first five months of 2026, according to INSG data, putting the market on track for a fourth consecutive year of oversupply. The surplus is entirely driven by Indonesia, where nickel-in-product output rose to an annualized 2.1 million tonnes.
Indonesia’s nickel dominance is reshaping global trade flows. Chinese NPI imports from Indonesia hit a record 9.2 million tonnes (wet basis) in May, up 28% year-on-year. Indonesian NPI now supplies roughly 85% of China’s stainless steel industry’s nickel requirements, displacing Philippine nickel ore and domestic Chinese NPI production.
The Indonesian government has signaled potential export policy changes for 2027, including a progressive tax on NPI exports to encourage domestic downstream processing. However, these proposals have been discussed since 2024 without implementation. For now, the export pipeline remains wide open, and new RKEF capacity of 400,000 tonnes per year is expected to come online in H2 2026.
On the cost curve, roughly 70% of global nickel production remains profitable at $16,570/mt. The bottom quartile of the cost curve sits around $8,000-9,500/mt, dominated by Indonesian NPI. High-cost producers — mainly ferronickel operations in China, Europe, and New Caledonia — are underwater at current prices and face shutdown risk if LME falls below $15,000.
The nickel surplus is structural, not cyclical. Buyers should expect prices to remain in the $15,500-17,500 range through H2 2026. For stainless steel procurement, negotiate annual contracts now while NPI prices are depressed. For battery supply chains, the risk is not price but grade availability — ensure sulfate contracts specify Class 1 nickel origin, as Indonesian NPI cannot directly supply the battery segment without further processing.