Nickel Price Outlook 2025: Impacts of Indonesian Supply

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Nickel

Nickel Price Outlook for 2025

Nickel prices are expected to stay between $15,000 and $18,000 per tonne in 2025. Strong nickel ore prices provide some upward support, but Indonesia’s growing smelting capacity will likely limit major price changes. Short-term fluctuations may still occur due to shifts in supply chains and policy adjustments. However, the market should stabilize in the long run.

Nickel Ore Prices and Indonesian Supply Tightness

Nickel ore prices remained high throughout 2023 due to tight supply. Delays in Indonesian mining approvals and limited production capacity have kept premiums for nickel ore elevated. CIF prices reached over $50 per wet metric tonne (wmt). Indonesia’s nickel ore output rose by 14% year-on-year in Q1-Q3 2023, signaling improved supply. The Indonesian government plans to approve additional mining quotas to meet demand from the EV sector. However, uncertainty remains over the allocation of these quotas between mixed hydroxide precipitate (MHP) for EVs and nickel pig iron (NPI) for stainless steel.

NPI and Production Cost Pressures

Indonesia leads in producing nickel pig iron (NPI), a key ingredient for stainless steel. Rising energy and ore costs have pushed NPI production costs higher, exerting downward pressure on Class 1 nickel prices. In Q3 2024, NPI production costs hit $11,794 per tonne, a 4.3% increase from the prior quarter. As NPI costs set the lower bounds for nickel pricing, any further rises will limit price declines.

Market Outlook: Supply Surplus and Changing Demand

The global nickel market may see a surplus in 2025 similar to 2023, which had a surplus of 167,000 tonnes. Demand for nickel in stainless steel will likely rise by 3%, but demand in the EV sector remains uncertain. The popularity of lithium-iron-phosphate (LFP) batteries, which use less nickel, could reduce demand. China’s 200,000-tonne annual nickel production capacity, based on Indonesian MHP and matte, will be a crucial factor. Some producers may continue producing nickel despite low profit margins, driven by liquidity needs and LME access.

Indonesia’s Influence on the Global Nickel Market

Indonesia remains central to the global nickel supply chain. Market participants closely monitor the country’s mining policies, taxes, and environmental regulations. Any changes could significantly affect global supply and prices. As the largest producer of nickel ore and NPI, Indonesia’s policies will shape the nickel market in 2025 and beyond.