Nickel Trades Below $16,500 as Indonesian Supply Swamps EV Demand Growth

LME nickel at $16,455 per tonne on June 30, 2026 represents a metal that has not participated in the speculative rallies that carried copper, tin, and aluminum to multi-year or all-time highs. TradingEconomics data shows nickel at roughly $16,312 on June 29, still about 7.9% higher than a year ago, but well below the $18,000+ level briefly touched after Indonesian quota news earlier in the year. SHFE nickel settled at ¥143,330 per tonne. LME warehouse stocks at 274,806 tonnes are essentially flat week-over-week but reflect the enormous inventory overhang that keeps a lid on any sustained rally.

Indonesia dominates the global nickel market to a degree that has no parallel in other base metals. The International Nickel Study Group (INSG) projected in its October 2025 outlook that global nickel production would reach 4.08 million tonnes in 2026 against usage of 3.82 million tonnes, yielding a surplus of 261,000 tonnes. ING, Sumitomo Metal Mining, and Argus all published surplus estimates in the 200,000-300,000 tonne range. Indonesian nickel pig iron (NPI) output alone is expected to reach 1.76 million tonnes in 2026, up 4.1% year-over-year, according to Sumitomo. The country's mixed hydroxide precipitate (MHP) capacity is almost doubling, adding another wave of intermediate product to an already oversupplied market.

But the consensus is starting to fracture. The INSG's April 2026 revision, cited by BigMint, flipped from a 2025 surplus of 283,000 tonnes to a 2026 deficit of roughly 32,000 tonnes — a swing of more than 300,000 tonnes in a single forecast update. The driver: Indonesian policy tightening. Jakarta has been signaling for months that it will restrict new NPI permits, crack down on illegal mining, and potentially introduce export taxes on intermediate products to force more domestic processing. If these policies materialize in H2 2026, the surplus narrative that has defined nickel for two years could dissolve rapidly.

EV battery demand remains the structural growth story for nickel, but the math is less favorable than the narrative suggests. High-nickel cathode chemistries (NMC 811 and similar) use significant nickel, but lithium iron phosphate (LFP) batteries — which use zero nickel — have been gaining market share, particularly in China. The IEA's critical minerals outlook sees nickel demand for clean energy technologies rising substantially by 2030, but the near-term path depends on battery chemistry choices that are being made right now by automakers under cost pressure. A shift toward LFP would reduce nickel demand growth by 30-40% compared to NMC-dominant scenarios.

The stainless steel sector, which consumes roughly two-thirds of global nickel, provides a baseline demand floor but not growth momentum. Chinese stainless output has been steady but faces headwinds from the property sector slowdown and trade restrictions. European stainless production has been flat. The US market, protected by Section 232 tariffs on steel, consumes nickel primarily through stainless imports and domestic specialty alloy production. The macroeconomic backdrop — high interest rates, a strong dollar, and slowing global growth — does not favor a stainless steel demand surge in H2 2026.

The bear case for nickel is straightforward: Indonesia keeps producing, surpluses persist, and LME nickel drifts toward $15,000 or lower as inventory builds. The bull case: Jakarta follows through on supply restriction policies, EV demand accelerates, and a forecast 260,000-tonne surplus becomes a 30,000-tonne deficit within six months. Between these poles, nickel offers the widest range of outcomes of any base metal — and the fewest tools for buyers to manage the risk, given the thinness of the LME contract relative to copper or aluminum. Most analysts see nickel averaging $16,000-17,500 for the full year, but the second-half range could be $14,000-20,000 depending entirely on Jakarta's next move.