Combined LME and SHFE nickel inventories more than doubled during 2024, from 83,000 tonnes to 198,000 tonnes. By late 2025, LME stocks alone had reached approximately 250,000 tonnes. SHFE stocks contributed another 45,000 tonnes. (FACT: LME, SHFE, ING, INSG) The build accelerated through 2025 as Chinese and Indonesian refined cathode — produced from the surplus of Class 1 intermediates — was shipped directly into exchange warehouses.

The composition of the inventory is critical. LME stocks are dominated by Chinese and Indonesian cathode and sheet brands — mostly Class 1 material (≥99.8% nickel) suitable for both the stainless and battery markets. This is not the NPI or ferronickel that feeds the stainless industry; it is refined metal that can be delivered against LME contracts. The Class 1 surplus is being warehoused, creating a physical overhang that caps every price rally. (FACT: ING, Wood Mackenzie)

The market has split into two realities. LME-traded nickel at approximately $18,500-19,000/t in May 2026 is priced for a balanced market, with the massive inventory overhang acting as a ceiling. Yet Indonesian ore supply is tightening, Weda Bay NPI smelters are cutting output, and the Class 2 market is shifting toward deficit. The disconnect between headline LME stocks and the underlying raw material market is the central tension in nickel today. (FACT: LME, SMM, Macquarie)

Price performance: LME nickel bounced from a December 2025 low of approximately $14,400/t to a January 2026 spike above $18,700/t — a 10% single-day surge on January 6 that was the largest since the March 2022 short squeeze. By mid-May 2026, nickel was trading at $18,985/t, up 21% year-on-year but still well below the $100,000/t crisis levels of 2022. (FACT: LME, Trading Economics, Reuters)

What this means for buyers

Do not confuse headline LME stocks with market tightness. The 250,000 tonnes sitting in LME warehouses is Class 1 metal that does not reflect the growing ore shortage in Indonesia. If you buy NPI or ferronickel for stainless production, the relevant market is tightening. For cathode buyers, however, the surplus provides a comfortable buffer. The key is to distinguish between Class 1 and Class 2 pricing — they are diverging. The LME nickel price is an average that masks this split. Source Class 1 and Class 2 separately and negotiate based on the specific market balance for each.