Nickel's Tough Cycle: Supply Surplus, Demand Uncertainty, and Trade Resistance [Indonesia Mining Conference]

At the 2025 Indonesia Mining Conference & Critical Metals Forum - Nickel, Cobalt, and NEV Session, Denis Sharypin, Strategy and Marketing Director of Norilsk Nickel, shared insights on the topic "Nickel's Tough Cycle: Supply Surplus, Demand Uncertainty, and Trade Barriers."

Due to current price levels, over 25% of nickel producers are operating at a loss, forcing the closure of multiple high-cost Class 1 assets.

In H2 2024 (excluding Nornickel), the LME-adjusted production cost

Indonesian nickel production growth (approximately 800,000 mt) far exceeded supply risks from other countries (around 400,000 mt).

Nickel projects idled, at risk of closure, or facing potential supply cuts

The production cost of Class 1 nickel has risen due to high MHP payables and low-grade NPI discounts. This situation is expected to persist for some time.

Driven by rising ore prices, accidents at Indonesian HPAL plants, lower matte conversion rates, and higher sulfur prices, the nickel payables in MHP have approached 85%.

Since mid-2024, the economic viability of converting NPI to matte has declined significantly. Consequently, we anticipate a reduction in the volume of intermediate products converted for nickel metal production.

Indonesian ore shortages, production cuts, and declining matte output have led to short-term supply tightness. However, with several new projects expected to commence operations between 2025 and 2026, this tightness is likely to ease.

Inventory changes and trade data indicate robust demand for Class 1 nickel in 2025. For the first time since 2023, exchange inventories declined between April and May. Additionally, China's Class 1 nickel imports surged 127% YoY from January to April 2025.

Economic regionalization, tariff wars, and revisions to the "green" agenda are weakening mid-term nickel demand.

Industrial Policies and Key Factors Influencing the Nickel Market

Outlook for Nickel Batteries: Uncertainties and Challenges

Mid-Term Outlook:Niche Material Nickel may continue to serve as a niche material in the mid-term, despite its unique advantages in certain applications, with long-term prospects remaining uncertain.

Diverse Chemical Compositions:Currently, battery technologies vary widely, with different chemical compositions each having their merits, and no clear "next-generation battery winner" has emerged.

Limiting Factors in EV Development:The growth of EV adoption is more constrained by infrastructure and charging speeds than by battery performance (e.g., energy density).

Policy Impact and Adjustment of Demand Expectations: With policy adjustments, market expectations for nickel demand in batteries have decreased, reflecting an increased reliance on other chemical components.

Diversified Options: The diversification of battery chemistry has made market choices more flexible. Although nickel-based batteries are one option, they are not the only one.

In summary, although there is still a market for nickel in batteries, its long-term prospects are highly uncertain, especially given the ongoing evolution of policies and technologies.

There is an oversupply of nickel ore in Indonesia, leading to low domestic value-added, low nickel prices, and depletion of nickel resources.

If current trends continue, the nickel market is expected to face oversupply, resulting in a decline in nickel prices.

Even if the price of Indonesian nickel ore is $100 per wmt, Chinese stainless steel remains competitive in Europe.

A potential increase in Indonesian nickel ore prices would boost the country's mining revenue, while the competitiveness of downstream businesses in Indonesia and China would remain unchanged.

Key Points:

Q: Will price reductions reduce the surplus supply in the market?

A: No, as long as Indonesia continues to increase nickel production.

Q: Will the current strong demand persist? What impact will a new round of tariff wars have?

A: There is high uncertainty.

Q: What is the outlook for nickel demand in batteries?

A: The prospects for nickel demand growth are affected by the optimization and cost reduction of LFP, as well as fierce competition in the automotive market.

Q: Is the recent improvement in market fundamentals resilient in the long term?

A: No. As long as Indonesia maintains a surplus supply of nickel, future market resilience depends on whether Indonesian policies can halt the undervalued consumption of natural resources and provide sufficient metals when the market truly needs them.

》Click to view the special report on the 2025 Indonesia Mining Conference & Critical Metals Conference