Nickel prices are expected to remain within a $15,000 to $18,000 per tonne range in 2025, as various factors influence both supply and demand. While strong nickel ore prices provide some upward support, the growing smelting capacity, particularly in Indonesia, will likely limit significant price fluctuations. Short-term price movements could still occur due to supply chain shifts and policy changes, but the overall market is expected to stabilize.
Nickel Ore Prices and Indonesian Supply Tightness
Nickel ore prices have remained elevated throughout 2023, primarily due to tight supply conditions. This is largely driven by delays in Indonesian mining approvals and limited production capacity. Premiums for nickel ore have remained high, with CIF (cost, insurance, and freight) prices reaching $50 per wet metric tonne (wmt) or more. Despite these challenges, Indonesia’s output of nickel ore rose by 14% year-on-year in the first three quarters of 2023, indicating that supply is gradually improving. In response to growing demand in the hydrometallurgical sector—particularly from the electric vehicle (EV) industry—the Indonesian government is expected to approve additional mining quotas. However, uncertainty remains regarding how these new quotas will be split between the production of mixed hydroxide precipitate (MHP) for the EV sector and nickel pig iron (NPI), which is used in stainless steel production.
NPI and Production Cost Pressures
Indonesia remains the largest producer of nickel pig iron (NPI), a key ingredient in stainless steel. Rising energy and ore costs have pushed up production costs for NPI, putting downward pressure on the price of Class 1 nickel. In Q3 2024, for example, the cash cost for NPI production reached $11,794 per tonne, marking a 4.3% increase from the previous quarter. As NPI production costs set the lower bounds for nickel pricing, any further increases in these costs will likely limit downward pressure on nickel prices.
Market Outlook: Supply Surplus and Changing Demand
The global nickel market is expected to face a similar surplus in 2025 as it did in 2023, which saw a surplus of around 167,000 tonnes. While demand for nickel in stainless steel production is expected to rise by approximately 3%, the outlook for nickel in the electric vehicle (EV) sector is less certain. The growing popularity of lithium-iron-phosphate (LFP) batteries, which are more affordable and have lower nickel content, is expected to reduce demand for nickel in battery production. Meanwhile, China’s addition of 200,000 tonnes per year of nickel production capacity, which relies heavily on Indonesian-produced MHP and matte, will be a key factor in shaping market conditions. Despite slim profit margins, some producers may continue to produce nickel to secure liquidity and access to global markets, particularly through London Metal Exchange (LME) registration.
Indonesia’s Influence on the Global Nickel Market
Indonesia’s role in the global nickel supply chain remains central, with the country’s policies on mining quotas, taxes, and environmental regulations being closely monitored by market participants. Any changes in these policies could have a significant impact on both global nickel supply and pricing. As the largest producer of nickel ore and NPI, Indonesia’s decisions will play a pivotal role in shaping the nickel market in 2025 and beyond.
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