Nickel Surplus Persists in 2026 Despite Indonesia’s Quota Cuts, Says ING

ING forecasts a global nickel surplus of 261,000 tonnes for 2026, only marginally narrower than the 209,000-tonne surplus recorded in 2025. Indonesia accounts for approximately 60% of global nickel output and remains the primary driver of mine supply growth, particularly through low-cost nickel pig iron (NPI) and expanding HPAL capacity. Margins for Indonesian producers remain resilient even at lower price levels due to integrated operations and low production costs. (FACT: ING, December 2025 / May 2026)

LME nickel inventories now stand at 287,550 tonnes, up 44.2% year-on-year, marking two consecutive years of stock builds. Only Class 1 nickel — which accounts for roughly one-quarter of global primary supply — can be delivered onto the LME. Excess nickel feedstock is being refined into Class 1 metal and absorbed by LME warehouses, where the fast-track listing of new brands continues to attract supply. (FACT: Tacto, ING, LME, May 2026)

A striking feature of the inventory build is the shifting geographic composition. Chinese cathode’s share of available LME tonnage rose to 70% in October 2025, from approximately 50% at the start of the year. Including Indonesian-origin metal, the combined share climbed to 75%, compared with 55% in January 2025. China’s refined nickel exports surged 55% year-on-year in the first ten months of 2025, while Indonesian nickel cathode exports rose nearly 80% in the first three quarters. (FACT: ING, October 2025 / May 2026)

The demand side of the equation offers little relief. Stainless steel continues to account for more than 60% of global nickel consumption, and its growth remains sluggish in 2026. Declining manufacturing activity across key global economies continues to weigh on nickel demand, as the manufacturing sector is the primary consumer of stainless steel. (FACT: ING, May 2026)

The battery sector, once viewed as nickel’s great demand hope, is expanding at a slower pace than previously expected. The rising share of non-nickel chemistries — particularly lithium iron phosphate (LFP) — is eroding nickel intensity in the EV battery market. In China, the world’s largest EV battery producer, nickel-manganese-cobalt (NMC) battery market share fell to 18% in the first nine months of 2025, down from 25% in 2024. LFP battery cells cost approximately 25% less than NCM cells in China, according to ICCSino data, and are gaining global popularity driven by cost advantages and the push for more affordable EVs. (FACT: ING, ICCSino, MINING.COM, May 2026)

In the United States, the removal of federal EV subsidies under the “One Big Beautiful Bill Act” passed in July 2025 has further dampened the demand outlook. The end of the $7,500 new-EV tax credit and $3,000 used-EV credit has raised effective purchase prices, contributing to a sharp decline in October EV sales and potentially slowing the overall pace of US EV adoption. (FACT: ING, May 2026)

ING’s average price forecast for nickel in 2026 stands at $15,250 per tonne, significantly below the current trading range of $19,000-19,400 per tonne. The bank notes that risks are skewed to the downside due to persistent surplus, but that Indonesian policy interventions and the sulfur squeeze provide upside risk that could keep prices from collapsing. (FACT: ING, December 2025)

The dichotomy in the nickel market is stark: on one hand, tightening ore supply from Indonesia and the sulfur-driven HPAL squeeze create bullish momentum; on the other, accumulated Class 1 inventories of nearly 288,000 tonnes on LME warrant and structurally weak demand from both stainless and battery sectors provide a formidable ceiling. The market appears to be pricing in a supply disruption scenario that has not yet fully materialized in refined metal availability. (FACT: Tacto, ING, LME, May 2026)