Nickel Prices Stall Near 4-Year Low
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Nickel futures have been hovering around the $15,500 per tonne mark since mid-February 2025, trading within a narrow range and remaining close to the four-year low of $15,000 tested multiple times in recent months.
This price stability comes as market participants evaluate whether Indonesia’s proposed output cuts will be sufficient to address the current oversupply situation in the global nickel market.
Indonesia, the world’s largest nickel producer, has been considering a significant reduction in its nickel mining quotas.
Initially, there were reports of potentially cutting the quota to 150 million tonnes for 2025, down from 270 million tonnes in 2024.
However, more recent data suggests that Indonesia has set a quota of around 200 million tonnes for nickel ore mining in 2025, with the possibility of further reductions if miners fail to meet environmental and regulatory standards.
Despite these potential supply constraints, the nickel market’s response has been muted, indicating that traders anticipate the oversupply situation to persist.
This oversupply is largely attributed to the rapid expansion of Chinese smelting projects in Indonesia following the country’s ban on nickel ore exports in 2020.
As of September 2024, Indonesia hosted 44 nickel smelting operations, a dramatic increase from just four a decade earlier.
The surge in Indonesian nickel processing capacity has raised concerns about China’s growing influence in the sector.
A report by the US government-funded think tank C4ADS revealed that Chinese companies control more than 75% of Indonesia’s nickel refining capacity, with many having ties to the Chinese government.
This concentration of ownership could potentially limit Indonesia’s ability to independently dictate pricing and supply decisions.
Adding to the bearish pressure on nickel prices is the development of new battery technologies by Chinese manufacturers that reduce or eliminate the need for nickel.
This shift in battery production methods further dampens the outlook for nickel demand, particularly in the rapidly growing electric vehicle sector.
The nickel market’s future will likely depend on the balance between Indonesia’s supply management efforts, China’s dominance in the refining sector, and evolving battery technologies.
Source: Trading Economics