LME Nickel Steady at $17,590 Amid Indonesian Supply Overhang

LME nickel prices remain range-bound near $17,500-17,600/t as the market absorbs persistent supply from Indonesia's sprawling nickel processing industry. LME warehouse stocks stand at 276,216t, up 0.5% week-over-week, and have remained above 250,000t since March 2026. The stockpile is the highest since the 2022 short squeeze.

Indonesia's nickel output continues to expand at an extraordinary pace. The country produced an estimated 2.1 million tonnes of nickel in various forms (NPI, MHP, nickel matte) in 2025, up 18% year-on-year, and 2026 output is projected at 2.3-2.4 million tonnes. New HPAL (High Pressure Acid Leach) plants are ramping up, adding 150,000t/yr of mixed hydroxide precipitate (MHP) capacity in 2026 alone. The Indonesian government maintains its ban on raw nickel ore exports, forcing processing to occur domestically.

The Class 1 nickel market — which produces high-purity nickel suitable for LME delivery — remains tighter than the overall nickel balance. Class 1 production growth has lagged the broader Indonesian NPI/MHP expansion. The LME premium for Class 1 nickel over the broader market is estimated at $1,000-1,500/t.

Demand growth is concentrated in the battery sector. Global nickel consumption for batteries reached 850,000t in 2025, up 25% year-on-year, and is projected at 1.1Mt in 2026. However, the shift toward LFP batteries in entry-level EVs is slowing the growth rate of lithium-ion battery-grade nickel demand.

Stainless steel, accounting for 65% of nickel demand, is growing at 2-3% annually. Chinese 300-series stainless output rose 2.5% in Q1 2026. EU stainless production grew 1.8%, supported by construction and capital goods sectors.