Why Nickel Prices Face Headwinds Through 2026 and Beyond

Nickel markets entered 2026 burdened by fundamental challenges that show little sign of easing. For much of 2025, the metal hovered around US$15,000 per metric ton (MT), weighed down by mounting Indonesian production and a market tilted decisively toward oversupply. As investors and producers eye the year ahead, the confluence of excess supply, weakening demand, and shifting battery technologies paints a bearish picture for this base metal.

The Indonesian Production Surge and Market Surplus

Indonesia’s dominance in global nickel output has reshaped market dynamics over the past five years. The world’s largest nickel producer expanded output to 2.2 million MT in 2024—nearly triple the 800,000 MT achieved in 2019. This dramatic expansion fundamentally altered the supply landscape, creating persistent downward pressure on prices.

In early 2025, Indonesia further increased its production quota to 298.5 million wet metric tons (WMT), up from 271 million WMT the prior year. The move was ostensibly designed to ease supply pressures, yet the outcome proved counterintuitive: stockpiles at the London Metal Exchange swelled to 254,364 MT by November, a sharp rise from 164,028 MT at the start of the year. Prices slumped further to US$14,295, reaching the lower threshold of profitability for low-cost Indonesian smelters.

This created an inflection point. As prices squeezed margins, discussion emerged about potential production cuts. Market sources suggested the Indonesian government could curtail ore extraction to approximately 250 million MT in 2026—a significant pullback from 2025’s 379 million WMT target. However, negotiations remain fluid, with final targets still under discussion. According to ING’s commodities strategist Ewa Manthey, Indonesia is likely to hold steady for now, awaiting the impact of new policies introduced in 2025 before committing to cuts.

The global nickel market is still projected to run a surplus of around 261,000 MT in 2026. Manthey noted that “even if Indonesia implements cuts, they would need to be substantial—on the scale of hundreds of thousands of metric tons—to meaningfully shift fundamentals. Such action seems unlikely without coordinated international effort.”

Demand Headwinds: Stainless Steel and Battery Chemistry Shifts

Nickel’s troubles extend well beyond supply imbalances. Demand growth has stalled on multiple fronts, creating a pincer effect that pressures prices from both directions.

Stainless steel accounts for over 60 percent of global nickel consumption, with Chinese construction and manufacturing providing a critical anchor for demand. Yet China’s property sector, which collapsed in 2020, has failed to recover meaningfully. November 2025 sales fell 36 percent year-over-year, with year-to-date declines reaching 19 percent. This persistent weakness in the world’s largest construction market has dampened stainless steel production and, by extension, nickel intake.

Perhaps more significant is the shift in electric vehicle battery chemistry. For years, rising nickel production was justified by surging EV adoption and the superiority of nickel-manganese-cobalt (NMC) batteries, which offered higher energy density and extended range. That competitive advantage has evaporated. Contemporary Amperex Technology and other major battery manufacturers have increasingly adopted lithium-iron-phosphate (LFP) chemistry. Recent LFP innovations now achieve ranges exceeding 750 kilometers while offering lower production costs and superior safety profiles.

The market data tells the story: nickel battery demand rose just 1 percent year-on-year in September 2025, while LFP battery demand climbed 7 percent. While most nickel growth was driven by the broader EV market expansion rather than chemistry preference, the trend is unmistakable.

Further dampening EV prospects, the US eliminated its US$7,500 EV tax credit in September, triggering a sharp demand collapse. Q4 2025 EV sales in the US plummeted 46 percent compared to Q3, and dropped 37 percent year-on-year. Ford Motor responded by cutting US$19.5 billion in EV investments and pivoting toward extended-range and hybrid vehicles. The European Union simultaneously abandoned its 2035 internal combustion engine ban. These policy reversals underscore softening support for the energy transition—a headwind for all battery metals, including nickel.

Price Outlook: A Year of Pressure

Given this structural backdrop, nickel prices are expected to labor throughout 2026. Manthey forecasts prices will “struggle to hold above US$16,000, with upside risks contingent on unexpected supply disruptions or demand surprises.” She projects an average nickel price of US$15,250 for the year—a figure corroborated by the World Bank’s US$15,500 projection, potentially rising to US$16,000 by 2027.

Nornickel, one of the world’s premier nickel producers, anticipates a refined nickel surplus of 275,000 MT in 2026, reinforcing the bearish consensus. Recovery appears distant under prevailing conditions; material upside would likely require prices sustained above US$19,000 to restore producer profitability and investor appeal—a scenario that seems improbable without fundamental market rebalancing or coordinated production restraint.

For producers and investors alike, 2026 shapes up as a year of endurance rather than opportunity.