Nickel Market 2026: What Investors Need to Know as Prices Face Pressure

The outlook for the nickel market in 2026 appears subdued, with forecasts pointing toward sustained weakness. Industry analysts expect nickel to struggle holding above US$16,000 per metric ton, with average prices projected around US$15,250 throughout the year. This grim forecast comes as the metal confronts a perfect storm of oversupply, flagging demand, and a shifting energy transition landscape that threatens traditional battery chemistry assumptions.

The Oversupply Conundrum: Why Indonesia Matters

Indonesia’s dominance in nickel production has fundamentally reshaped the global nickel market. The country’s output nearly tripled between 2019 and 2024, rising from 800,000 MT to 2.2 million MT — a transformation driven by aggressive expansion policies. In February 2025, the Indonesian government raised its ore extraction quota to 298.5 million wet metric tons, further flooding the market with supply.

This abundance has created a visible impact on exchange inventories. London Metal Exchange stockpiles surged to 254,364 MT by late November 2025, up sharply from 164,028 MT at the start of the year. The influx pushed nickel prices down to US$14,295 — a level that pressures even low-cost Indonesian operations.

Discussions are underway about potential production cuts. According to reports, Indonesian officials have proposed reducing nickel ore output to approximately 250 million MT in 2026. However, uncertainty surrounds whether such cuts will materialize. Industry strategist Ewa Manthey from ING notes that while the global nickel market faces a projected surplus of 261,000 MT in 2026, Indonesia appears reluctant to make aggressive cuts at present. She points out that for prices to reach the US$20,000 range needed to support western producers, supply constraints would need to be far more dramatic — likely requiring hundreds of thousands of MT in cuts.

Demand Headwinds: Stainless Steel and the EV Battery Shift

Beyond supply glut, the nickel market struggles with weakening demand fundamentals. Stainless steel production, which accounts for over 60% of global nickel consumption, faces pressure from China’s troubled property sector. Despite government efforts to stabilize housing markets, Chinese sales declined 36% year-on-year in November 2025, indicating the sector remains mired in weakness.

The electric vehicle battery landscape is shifting in ways unfavorable to nickel chemistry. While nickel-manganese-cobalt batteries were once prized for energy density and range, lithium-iron-phosphate (LFP) technology has advanced significantly. Contemporary Amperex Technology and other major manufacturers are pivoting toward LFP, which now achieves ranges exceeding 750 kilometers at lower production costs and with improved safety profiles.

Battery demand data underscores the trend. Nickel battery demand rose just 1% year-on-year in September 2025, while LFP demand jumped 7%. More concerning for the nickel market, US EV sales collapsed in Q4 2025, dropping 46% from the prior quarter following the elimination of the country’s EV tax credit in September. Ford Motor has scaled back its EV roadmap with a US$19.5 billion writedown, pivoting toward extended-range vehicles and hybrids. The EU’s decision in December to abandon its 2035 internal combustion engine ban further dampens battery metals demand.

The Price Forecast and What It Means

For 2026, expect the nickel market to remain under pressure. Manthey forecasts prices will struggle maintaining levels above US$16,000 without significant supply interruptions or demand surprises. The World Bank similarly projects nickel averaging US$15,500 in 2026, rising modestly to US$16,000 in 2027. Russia’s Nornickel, among the world’s largest producers, warns of a 275,000 MT surplus of refined nickel heading into 2026.

The profitability squeeze poses challenges for producers and investors alike. Without a meaningful shift in market fundamentals — whether through coordinated production cuts or an unexpected demand surge — the nickel market appears locked into a period of sustained weakness and limited recovery prospects through the medium term.