[SMM Analysis] Nickel Intermediate Product Market Outlook for 2026

1. Significant supply expansion

In 2026, the concentrated release of new capacity in Indonesia will continue to be the core driver of supply growth. For MHP, with new projects coming online in 2026, Indonesia's MHP capacity is expected to reach 850,000 mt in metal content, up 85% YoY; annual production in Indonesia is expected to approach 680,000 mt in metal content, up 45% YoY. The supplementary role of high-grade nickel matte will become more evident in 2026.

2. Insufficient demand growth momentum

Demand shows a structural divergence, with limited overall growth. For new energy, the purchase tax for NEVs in 2026 will be reduced from exempted to halved. Driven by policy, the growth rate of passenger NEV sales is expected to slow down in 2026. Coupled with LFP (mid-end, for NEV) squeezing the ternary market, it is estimated that the production of ternary cathode material in China in 2026 will be 760,000 tons, a slight decrease YoY. For refined nickel, the ramp-up and release of new projects in 2026 will drive an increase in production, with an estimated output of about 1.15 million tons, up 9.5% YoY.

3. Clear cost support

The release of RKAB quotas in Indonesia and the impact of key auxiliary material sulfur will lead to an increase in the cost of nickel intermediate products. In 2026, the cobalt-equivalent cost of MHP is expected to be around $11,000/mt (metal content), up 3% YoY; the cost of high-grade nickel matte in 2026 is expected to be around $13,800/mt (metal content), up 7% YoY. On the ore side, the Indonesian government will control ore prices, being cautious with the release of RKAB quotas and related policies based on market supply and demand, directly pushing up ore costs. For sulfur, the release of MHP project capacity in Indonesia will increase smelters' demand for sulfur, leading to an expected rise in sulfur prices YoY.

4. Summary

In 2026, nickel intermediate products will face a market situation where "demand growth lags behind supply growth." Additionally, it is expected that the proportion of MHP flowing into refined nickel will increase. The progress of RKAB policy approval in Indonesia remains a key variable, and attention should be paid to the cost of intermediate products and the release of downstream capacity.