What's Next for Nickel in 2026: Charting the Metal's Troubled Path

The nickel market limped through 2025, with prices hovering around US$15,000 per metric ton for most of the year, failing to deliver the recovery many producers hoped for. The culprit isn’t just one factor—it’s a perfect storm of weak demand, policy shifts favoring cheaper battery chemistries, and a glut of supply that shows no signs of abating.

Demand Headwinds Are Mounting

The real challenge facing nickel extends beyond excess production. On the consumption side, the outlook is decidedly bleak. Nickel’s largest end-use is stainless steel production, with the bulk destined for China’s residential construction sector. However, China’s housing market remains in freefall. In November 2025 alone, property sales tumbled 36 percent compared to the prior year, with cumulative declines of 19 percent through the first eleven months—a trend that continues to suppress stainless steel offtake and, by extension, nickel demand.

The EV battery sector, which once promised to offset stainless steel weakness, is now becoming part of the problem. Major battery manufacturers including Contemporary Amperex Technology have pivoted toward lithium-iron-phosphate (LFP) chemistry, abandoning nickel-manganese-cobalt formulations. While nickel-based batteries historically offered superior energy density, LFP technology has closed the gap, now enabling driving ranges exceeding 750 kilometers while remaining cheaper and inherently safer.

Data tells the story: nickel battery demand rose just 1 percent year-on-year in September, whereas LFP demand surged 7 percent. In the US specifically, headwinds accelerated after the elimination of the federal EV tax credit in September. American electric vehicle sales plummeted 46 percent in Q4 compared to Q3, and fell 37 percent year-over-year. Major automakers are responding accordingly—Ford took a US$19.5 billion write-down and is redirecting resources toward hybrid and extended-range vehicles. Meanwhile, Europe abandoned its 2035 internal combustion engine ban, further dampening near-term EV growth projections.

Indonesian Supply: A Persistent Overhang

Indonesia’s dominance in nickel production remains the market’s defining feature. The nation produced roughly 2.2 million metric tons in 2024—an extraordinary jump from just 800,000 MT in 2019. To understand the scale of this explosion, consider that Indonesia’s February 2025 quota adjustment increased permitted nickel ore extraction to 298.5 million wet metric tons from 271 million WMT, ostensibly to ease supply pressures by confining output to major producing areas. The adjustment backfired.

By late November 2025, London Metal Exchange nickel inventories had surged to 254,364 MT, nearly 55 percent higher than the 164,028 MT recorded at the start of the year. This inventory buildup compressed prices toward US$14,295—dangerously close to the break-even point for low-cost Indonesian mining operations.

Profitability concerns have sparked discussion of production reductions. Sources indicate the Indonesian government is contemplating cutting nickel ore output to approximately 250 million MT in 2026, down significantly from the 379 million WMT target established for 2025. Yet negotiations remain fluid, and finalization could take months. More importantly, analysts suggest Indonesia may delay such cuts, given new policy frameworks introduced throughout 2025. The April royalty restructuring—shifting from a flat 10 percent to a variable 14-18 percent rate tied to nickel prices—combined with October’s mining license validity reduction from three to one year, gives the government enhanced leverage to adjust production dynamically rather than commit to predetermined cuts.

The Western Producer Squeeze

While Indonesian producers operate profitably at lower price tiers, Western nickel miners face an existential squeeze. These operations began curtailing activity in 2024 when LME prices averaged US$16,812, then ceased to be economical even when prices briefly touched US$21,000 in May of that year. For Western producers to resume operations, prices would need to sustain levels above US$20,000—a target that appears increasingly distant.

Commodity strategists note that achieving such price levels would require coordinated, aggressive supply cuts capable of erasing the vast majority of the forecasted surplus—potentially 250,000+ metric tons annually. Without synchronized international action, such rebalancing seems unrealistic. Even if achieved, investor sentiment would likely demand sustained prices substantially above US$20,000 before confidence returns to the sector.

2026 Price Outlook: Structural Weakness Persists

Looking ahead, the consensus among market watchers is decidedly pessimistic. Commodity strategists forecast nickel will struggle to hold above US$16,000 throughout 2026, with prices averaging around US$15,250 for the year. The World Bank’s independent forecast aligns closely, projecting US$15,500 for 2026, rising modestly to US$16,000 in 2027. Russia’s Nornickel, one of the world’s largest producers, corroborates these grim projections by flagging a refined nickel surplus of approximately 275,000 MT in 2026.

Price upside risks remain limited. Any meaningful rebound would require unexpected supply disruptions or significantly stronger-than-anticipated demand from stainless steel or battery applications—neither appearing likely under current fundamentals. The downside scenario is far more probable: prices could test lower levels if surplus inventory continues accumulating.

The Bottom Line

Nickel faces structural headwinds unlikely to dissipate in the near to medium term. Until genuine demand catalysts emerge or supply discipline is imposed through coordinated action, the metal appears destined to trade in a depressed range. For producers and investors, 2026 promises to be another year of patience and pressure.