Nickel prices fell to a five-year low of around USD 15,000/ton in Q1 2025, a sharp decline from over USD 20,000/ton in May 2024. The main causes include oversupply, rising costs, and weak demand. As the world’s largest nickel producer, Indonesia saw a slowdown in production growth and implemented a new tax policy starting April 26, which increased royalty rates on nickel products—further worsening the challenges faced by nickel producers already under pressure from rising ore prices.

Tensions in U.S.-China trade relations, particularly a new round of tariffs imposed by the U.S., have further fueled market pessimism. Following Trump's tariff announcement on April 2, nickel prices on the London Metal Exchange dropped 11.5% within a week. These tariffs could suppress China’s manufacturing activity, thereby weakening demand in the world’s largest nickel-consuming country.

Although electric vehicle adoption continues to grow, the growth rate of nickel demand in the battery sector has slowed significantly, as manufacturers shift toward more cost-effective nickel-free battery chemistries such as lithium iron phosphate (LFP) batteries. Between January and February 2025, demand for nickel-containing NMC (nickel-manganese-cobalt) batteries fell by 19%. In 2024, the battery industry accounted for approximately 11.5% of total nickel demand.