The price premium of Class 1 nickel (minimum 99.8% purity, deliverable against LME contracts) over nickel pig iron (NPI, used primarily in stainless steel) has narrowed to approximately $2,800 per metric ton in June 2026, down from over $4,000 in early 2025. The compression reflects two trends: continued NPI oversupply from Indonesia and slowing demand growth for battery-grade nickel.
Chinese electric vehicle sales grew roughly 20% year-over-year in the first half of 2026, according to China Association of Automobile Manufacturers data. While still healthy in absolute terms, this is a significant deceleration from the 35% growth rate in 2025 and over 40% in 2024. The slowdown reflects market maturation and the rollback of some purchase subsidies.
Battery chemistries are also shifting. Lithium-iron-phosphate (LFP) batteries, which contain no nickel, now account for roughly 68% of Chinese EV battery production -- up from 62% a year ago. This structural shift away from nickel-rich NCM (nickel-cobalt-manganese) cathodes is reducing the marginal demand pull for Class 1 nickel from the battery sector.
However, the conversion of Indonesian NPI into nickel matte -- which can be further processed into battery-grade nickel sulfate -- has created a bridge between the two markets. This means excess NPI supply can now directly compete with Class 1 nickel for battery applications, breaking the historical segmentation between stainless steel and battery nickel markets.
The erosion of the Class 1 premium means LME nickel prices are more directly exposed to Indonesian NPI economics than ever before. For stainless steel buyers, nickel costs are falling. For battery supply chain procurement, the matte conversion route means security of nickel supply is no longer a concern — Indonesia can supply both markets. Use the abundant supply to negotiate lower nickel sulfate premiums.