The premium for high-purity Class 1 nickel suitable for battery cathodes widened to $500-800/t over LME in May, as sulphide mine closures in Canada and Australia reduce available feed for the battery supply chain, even as Indonesian laterite-based nickel remains abundant.
Indonesia's HPAL projects continue ramping up MHP production at +35% YoY, but MHP requires further processing for Class 1 nickel sulphate and conversion capacity remains constrained. Battery demand growth, though slower due to LFP chemistry adoption, remains positive at 12-15% annual growth in nickel-containing cathode volumes.
While ING projects an overall surplus of 261kt, much is in NPI and other Class 2 forms not deliverable against LME contracts. The battery-grade market is significantly tighter than headline numbers suggest. China's dominance in LME cathode supply (70% of tonnage) adds complexity.