What's Next for Nickel Prices? 2026 Market Outlook Faces Headwinds

The nickel prices landscape in 2025 painted a picture of stagnation and struggle. For most of the year, this industrial metal hovered near US$15,000 per metric ton, weighed down by relentless supply gluts from Indonesia and tepid demand signals across key end-use sectors. As we head into 2026, the fundamental question remains: can nickel finally find equilibrium, or will oversupply and weakening demand continue to pressure prices?

The Indonesian Supply Puzzle: More Output, More Problems

Indonesia’s dominance in global nickel production has become both a defining feature and a persistent challenge for the entire market. This Southeast Asian nation, responsible for more than 40% of global nickel output, ramped up production dramatically over the past five years. Official data shows full-year 2024 nickel production reached an impressive 2.2 million MT — a staggering jump from just 800,000 MT in 2019.

The pace continued accelerating into 2025. In February, Jakarta adjusted its quota system upward, raising nickel ore extraction capacity to 298.5 million wet metric tons from the previous 271 million WMT, supposedly aimed at curbing supply pressures — a counterintuitive move that instead flooded the market further.

The result has been predictable: exchange warehouse inventories exploded. By the end of November 2025, London Metal Exchange stockpiles had swelled to 254,364 MT, nearly 55% higher than the 164,028 MT recorded at the start of the year. As inventory piled up, nickel prices deteriorated to US$14,295 — dangerously close to the profitability floor for Indonesia’s lowest-cost smelters.

This dynamic has sparked speculation about potential production cuts. Reports indicate the Indonesian government is mulling a reduction to around 250 million MT in 2026, down significantly from the 379 million WMT targeted for 2025. However, these discussions remain preliminary, and finalizing the exact production cap will likely take months.

Will Supply Restraint Actually Happen?

Market observers remain skeptical about meaningful Indonesian output reductions. Ewa Manthey, a commodities strategist at ING, believes Indonesia will hold steady with current production levels throughout 2026, given that the global nickel market is still projected to run a surplus of roughly 261,000 MT.

“To genuinely shift market fundamentals, supply cuts would need to be substantial — we’re talking hundreds of thousands of metric tons. That level of coordination seems unlikely without a unified regional strategy,” Manthey explained.

Adding complexity to the picture are policy shifts Jakarta implemented in 2025. A dynamic royalty system introduced in April now charges 14-18% depending on nickel prices, replacing a flat 10% rate. Separately, mining license validity periods were slashed from three years to just one in October, giving authorities tighter control over production decisions. These mechanisms may allow policymakers to modulate supply more responsively going forward, but their cumulative impact remains uncertain.

Western nickel producers face a particularly challenging situation. These miners need prices sustained around US$20,000/MT to maintain profitability and investment returns — a level last seen briefly in mid-2024. Yet the structural surplus makes such price levels elusive without aggressive, coordinated supply reductions that appear unlikely under current geopolitical and economic conditions.

Demand Weakness: A Persistent Headwind

Beyond supply abundance, nickel’s demand fundamentals are equally concerning. The metal’s primary application — stainless steel production destined for construction and industrial use — remains ensnared by China’s prolonged housing crisis. Though Beijing implemented stimulus measures throughout 2024 and early 2025, the property sector continued deteriorating, with November sales plummeting 36% year-on-year and cumulative year-to-date sales down 19%.

Since stainless steel accounts for over 60% of global nickel consumption, this Chinese property slump directly undermines prices. “Even with broader economic growth, China’s construction sector stagnation keeps nickel demand subdued. A genuine property turnaround would help, but given the forecasted surplus, price recovery would remain capped,” noted Manthey.

The electric vehicle battery sector, once touted as nickel’s growth savior, has also disappointed. Battery chemistry preferences shifted markedly away from traditional nickel-manganese-cobalt formulations toward lithium-iron-phosphate (LFP) technology. Producers including Contemporary Amperex Technology, one of the world’s largest cell manufacturers, prioritized LFP due to its cost advantages and safety profile, even as performance gaps narrowed.

Recent data underscores this shift: in September 2025, nickel battery demand rose just 1% year-on-year, while LFP demand surged 7%. Most remaining nickel battery growth reflects general EV market expansion rather than chemistry-specific demand.

The EV Policy Reversal That Changed Everything

A critical turning point arrived in late 2025 when energy transition policies abruptly stalled. The US eliminated its US$7,500 EV tax credit in September, triggering a sharp demand collapse — early data showed American EV sales tumbled 46% in Q4 compared to Q3. Meanwhile, Ford Motor announced a US$19.5 billion writedown and pivoted toward extended-range hybrid vehicles, while the EU abandoned its 2035 internal combustion engine ban.

These policy reversals represent a meaningful setback for battery metal demand, including nickel. Policymakers’ loss of momentum on electrification could dampen nickel demand growth for years.

Where Are Nickel Prices Headed?

Given these converging headwinds, analyst projections for 2026 remain decidedly bearish. ING expects nickel prices to struggle holding above US$16,000 throughout the year, averaging around US$15,250 — nearly in line with the World Bank’s US$15,500 forecast. Any price recovery appears contingent on unlikely scenarios: unexpected supply disruptions or dramatically stronger-than-anticipated demand.

Upside resistance looks formidable near US$19,000, and sustained moves above that level appear improbable under current market structure. Russia’s Nornickel, one of the world’s largest integrated producers, forecasts a refined nickel surplus of 275,000 MT in 2026, further validating the bearish outlook.

The Bottom Line

For nickel investors and producers, 2026 looms as another challenging year. With supply abundant, demand subdued, and policy tailwinds reversed, the path to material price appreciation appears blocked. Meaningful recovery requires either a dramatic shift in market fundamentals — such as coordinated Indonesian production cuts or a robust rebound in Chinese construction and global EV adoption — or external supply shocks that currently show no signs of materializing. Until such catalysts emerge, nickel prices may continue grinding lower, testing the resolve of marginal producers and patience of investors waiting for better days ahead.