The nickel market's structural bifurcation between Class 1 and Class 2 products continues to widen. LME-deliverable Class 1 nickel now commands a premium of $500-800/mt over the broader nickel composite price, driven by battery sector demand for high-purity nickel sulfate.
Nickel sulfate premiums over LME cash have strengthened to $300-400/mt as battery cathode manufacturers in China, South Korea, and Europe compete for available supply. The premium has more than doubled since Q1 2025, reflecting the accelerating pace of EV battery production.
High-nickel cathode chemistries remain the preferred technology for long-range EVs, with NCM 811 and NCM 9.5.5 chemistries gaining market share. Each GWh of NCM 811 battery capacity consumes approximately 800 tonnes of nickel content.
On the supply side, the conversion of NPI to matte in Indonesia has been slower than expected. Technical challenges at High-Pressure Acid Leach (HPAL) facilities have limited Class 1 nickel production from the Indonesian HPAL pipeline, with several projects running 6-12 months behind schedule.
Global nickel supply is projected at 3.45 million tonnes in 2026, with Class 1 nickel representing approximately 45% of total supply. The market is expected to remain in a modest deficit for Class 1 product even as the broader nickel complex is roughly balanced.
The Class 1 premium is likely to persist as battery demand outpaces HPAL project ramp-up. Buyers requiring high-purity nickel should lock in term supply agreements at a fixed premium over LME, as spot premiums typically widen during periods of strong demand.