Nickel market set to remain in surplus through 2026: ING

Global nickel supply is expected to exceed demand again in 2026, with Indonesia—accounting for around 60% of global output—remaining the dominant driver of supply growth, particularly through low-cost nickel pig iron (NPI) and expanding high-pressure acid leach (HPAL) capacity, ING said in a recent report.

Margins for Indonesian producers remain relatively resilient due to integrated operations and low production costs, even in a lower-price environment. By contrast, ex-Indonesia producers continue to struggle, with mine closures, scrapped development projects and asset sales mounting as prices fall. However, ING noted that these reductions remain insufficient to counter Indonesia’s rapid capacity growth.

Indonesia tightens permit controls

The report highlighted that Indonesia has recently intensified efforts to tighten governance of its mining sector, providing some cautious optimism for a more balanced market. Stricter permit enforcement aims to better manage supply and stabilise prices, signalling stronger political control over output and greater uncertainty around future production.

Environmental and safety crackdowns have resulted in the seizure of part of the Weda Bay concession—the world’s largest nickel mine—in September and the suspension of 190 mining permits nationwide. The government has also shifted to annual RKAB production quotas from the previous three-year approval cycle.

HPAL operations, central to Indonesia’s push into battery-grade nickel, are facing increased domestic scrutiny due to intensive acid use, high waste volumes and complex tailings management. ING said these concerns may influence future project approvals and add further uncertainty to Indonesia’s supply trajectory.

Permit halt for intermediate product refiners

Most recently, Indonesia has halted new permits for refining facilities producing only intermediate products—such as NPI, ferronickel, matte and MHP. New processing plants remain allowed, but only if companies commit to producing higher-value downstream products.

The move accelerates Indonesia’s long-term strategy to climb the value chain, reduce oversupply in intermediate markets and boost investment in refined and battery-grade nickel. Although this offers little immediate relief due to already-approved projects still coming online, strict enforcement could tighten supply in the medium to long term.

Surpluses remain large

Supply risks for nickel do exist, ING said, but they remain insufficient to materially change the surplus outlook. The global market is forecast to record a surplus of 261,000 tonnes in 2026, following an estimated 209,000-tonne surplus this year.

This surplus is particularly evident in the Class 1 market, reflected in rising stocks at LME-tracked warehouses, which have now been building for two consecutive years and currently sit at a four-year high. Only Class 1 nickel—around a quarter of global primary supply—is deliverable to the LME.

Read also: Nickel market surplus expected to reach 198,000 tons in 2025, says INSG

Excess feedstock continues to be refined into Class 1 metal and absorbed by the exchange, where fast-track listing of new brands is drawing in more supply. China’s refined nickel exports rose 55% year-on-year in the first 10 months of 2025, while Indonesia’s nickel cathode exports increased nearly 80% in the first three quarters compared with the same period in 2024.

In October, Chinese-origin metal accounted for 70% of available LME tonnage, up from about 50% at the start of the year. Including Indonesian metal, the share reached 75%, compared with 55% in January.

Demand outlook: stainless steadies, batteries lag

Stainless steel—still accounting for over 60% of global nickel demand—is expected to register only modest growth in 2026, as weakening manufacturing activity across major economies continues to weigh on prices.

The battery sector is expanding, but at a slower pace than previously anticipated due to the rising adoption of non-nickel chemistries, particularly lithium-iron-phosphate (LFP). In China, the world’s largest EV battery producer, the market share of nickel-manganese-cobalt (NMC) chemistries fell to 18% in the first nine months of 2025 from 25% in 2024.

LFP batteries are cheaper, safer and offer longer cycle life; LFP cells cost roughly 25% less than NMC cells in China, according to ICCSino. The continued shift toward LFP—along with stronger demand for plug-in hybrids at the expense of battery EVs—will keep demand for nickel-intensive chemistries under pressure.

The trend is now global. In the United States, EV demand faces further headwinds following the removal of federal tax credits of up to US$7,500 for new EVs under the

July budget package, the “One Big Beautiful Bill Act.” ING noted an initial sharp decline in October sales, signaling a likely slowdown in EV adoption and potential inventory buildup.

Risks skewed to the downside

The nickel market is expected to remain under pressure in 2026 as supply continues to outpace demand. ING identified several key risks:

• Upside risk: Indonesia’s regulatory stance. Export controls, production limits or stricter environmental rules could tighten supply.
• Downside risk: Faster-than-expected substitution away from nickel-rich chemistries would deepen the surplus further.
• Macroeconomic risk: Slower global growth would weaken stainless-steel demand.

“Nickel prices are likely to remain range-bound, constrained by elevated inventories and subdued demand; however, the threat of supply disruptions from Indonesia will limit the downside. We see prices averaging US$15,250 per tonne in 2026,” ING concluded.