Global Nickel Surplus to Persist as Indonesia Expands

Nickel

Global Nickel Surplus will persist through the decade as Indonesian supply keeps growing. The outlook points to sustained price pressure and rising LME stocks. As a result, Global Nickel Surplus remains the base case for traders and producers.

Indonesia’s dominance keeps prices capped

Indonesia now anchors world output and extends capacity again. Producers there add HPAL, matte, and MHP lines to push Class 1 units. Meanwhile, NPI still supplies most global nickel, compressing the NPI discount to LME metal. Therefore, Global Nickel Surplus endures even after closures elsewhere. Many non-Indonesian assets stay cash-negative near $15,000/t.

Stocks swell while battery demand underperforms

LME inventories rise as Indonesia and China refine more metal. Chinese net imports and strategic stockpiles also climb. However, EV batteries shift toward LFP and away from high-nickel chemistries. Stainless steel demand holds up at low prices, but not enough to balance the market. Consequently, Global Nickel Surplus widens despite stainless resilience.

Policy risks grow inside Indonesia. Authorities review permits, fine operators, and tighten ore controls. Ore grades trend lower, lifting costs and threatening margins. Even so, installed capacity already exceeds three million tonnes a year. Therefore, any near-term permitting delays may only slow, not stop, supply growth.

Producers pivot, recycle, and hedge

Producers cut ex-Indonesia capacity yet fail to rebalance supply. Western buyers lean on recycling, but Asia’s recycling rates lag. Traders hedge around a firm $15,000/t floor and watch spreads. OEMs diversify alloys and manage exposure to Class 1 premiums.

The Metalnomist Commentary

Watch Indonesia’s permitting cadence and HPAL ramp curves. A genuine bull case needs slower Indonesian growth or a clear swing back to nickel-rich batteries. Until then, expect range-bound prices, elevated inventories, and selective shutdowns outside Indonesia.