China Nickel Sulphate Market Holds Firm Amid Supply Tightness and Weak NCM Demand

Nickel Sulphate

China nickel sulphate prices have remained stable for over a month due to constrained supply and sluggish demand from the NCM battery sector. Despite declining output and elevated feedstock costs, producers have resisted lowering prices to protect margins. The China nickel sulphate market is now facing a complex supply-demand imbalance shaped by both upstream disruptions and shifting downstream preferences.

Feedstock Supply Disruptions Tighten Production Margins

Nickel sulphate output in April dropped to 30,000 tonnes (nickel metal equivalent), down 13% month-on-month and 18% year-on-year. Cumulative output for January–April stood at 127,000 tonnes, 1.6% lower than the previous year, according to CNIA data. This production cut stems from limited availability of mixed hydroxide precipitate (MHP) and nickel matte, both critical inputs for sulphate production. Heavy rainfall in Morowali, Indonesia, disrupted MHP production in March and April, reducing output by 5,500 tonnes. At the same time, matte producers in China shifted to more profitable nickel pig iron (NPI), reducing matte availability. Consequently, the payable indicators for MHP and matte rose significantly, eroding margins and compelling some plants—like those in Guangxi—to convert from matte to MHP feedstock. These factors have kept the China nickel sulphate market tight despite weak demand.

NCM Battery Demand Shrinks as LFP Dominance Grows

While supply tightens, demand has faltered. NCM and NCA batteries, once dominant, have lost significant market share to lithium iron phosphate (LFP) chemistries. As of April, NCM batteries accounted for just 20% of China’s battery output, while NCA stood at 17%, down from a combined 65% in 2019. This shift has impacted upstream nickel demand, causing several international projects to stall. In recent months, Eramet and BASF withdrew from their Weda Bay refining JV, and Hanrui Cobalt cancelled its MHP investment in Indonesia. Meanwhile, automakers like Volkswagen are pivoting toward LFP technology to cut costs. Demand for NCM batteries is expected to remain weak through Q2 2024, with some exporters front-loading shipments earlier in the year due to global trade tensions. As a result, the China nickel sulphate market remains under pressure, with producers navigating tight margins amid uncertain downstream growth.

The Metalnomist Commentary

China’s nickel sulphate market exemplifies the structural turbulence within the EV battery supply chain. As feedstock constraints collide with weakening demand for NCM chemistries, producers must brace for lower growth visibility and rising volatility across Asia’s nickel value chain.

Hanrui Indonesian Nickel Smelter Faces Delays but Signals Long-Term EV Ambitions

Indonesian Nickel Smelter

Chinese cobalt major Hanrui has delayed the launch of its Indonesian nickel smelter, citing permit extensions and geological challenges. The Hanrui Indonesian nickel smelter project, located in Central Sulawesi, will now commence production in March 2026, ten months later than planned.

Construction Shifts Toward Nickel Matte Output

Hanrui Nickel Indonesia, a subsidiary of Nanjing Hanrui, will operate the facility within Huabao Industrial Park. While the project originally targeted mixed hydroxide precipitate (MHP), the company has shifted focus to nickel matte production. The plant will produce 20,000 tonnes per year of nickel metal equivalent using oxygen-enriched continuous blowing technology. Construction is expected to take 15 months, though a detailed timeline is still pending.

This pivot reflects Hanrui’s strategic move to meet rising demand for nickel matte in the global electric vehicle (EV) battery market. Indonesia, with its abundant laterite resources, remains central to Chinese companies’ raw material supply strategies.

Fiscal Incentives and Long-Term Strategic Goals

The Indonesian government has granted Hanrui Nickel Indonesia a seven-year corporate income tax exemption. Following that, the project will receive a 50% income tax reduction for an additional two years. These tax incentives are part of Jakarta’s broader effort to localize value-added processing and attract foreign investment into its nickel sector.

Despite the delay, Hanrui views the Indonesian nickel smelter as a cornerstone in its ambition to deepen involvement in the EV battery supply chain. The project is expected to enhance China’s influence in critical battery materials and align with global trends in securing upstream supply.

The Metalnomist Commentary

Although delayed, the Hanrui Indonesian nickel smelter illustrates China’s enduring strategy to dominate EV raw materials. With tax breaks and technological shifts toward nickel matte, Hanrui is positioning itself for long-term relevance in the global battery ecosystem.

LME Approves Listing of China's Greatpower Co. Cobalt Cathode

Greatpower

The London Metal Exchange (LME) has officially approved the listing of Zhejiang Greatpower Co.'s GREATPOWER brand cobalt cathode. This milestone, announced on December 17, 2023, marks a significant step for the Chinese cobalt industry in gaining global recognition. Greatpower, a major player in cobalt production, operates a state-of-the-art cobalt cathode facility in Shangyu district, Shaoxing city, located in eastern China’s Zhejiang province.

Expansion Plans for Greatpower

Since its launch in 2022, the Greatpower cobalt cathode facility has maintained a production capacity of 2,000 tons per year (t/yr). Looking ahead, the company is set to double its output by 2025, with plans to reach 4,000 t/yr. This expansion will help Greatpower meet the growing global demand for refined cobalt, particularly as cobalt remains essential for energy storage technologies, electric vehicle (EV) batteries, and other high-tech industries.

China’s Growing Cobalt Production Capacity

Greatpower’s refined cobalt output, which includes cobalt sulphate, cobalt chloride, and cobalt cathode, contributes to the nation’s rapidly expanding capacity in cobalt metal production. In 2023, the price premium for cobalt metal over cobalt salts has encouraged domestic refineries to increase their production. According to market forecasts, China’s cobalt metal capacity is expected to more than double, reaching around 65,000 tons in 2024, with further potential for growth to 80,000 tons by 2025.

Key players in China's cobalt industry, including Jinchuan, Huayou, GEM, Hanrui, Tengyuan, and Guangxi Yinyi, are expanding their operations. New entrants such as CNGR and New Era Group Zhejiang Zhongneng are also slated to launch production lines in 2024.

Impact of LME Listings

The LME’s approval of cobalt cathodes from China is expected to slightly ease the oversupply in the domestic market. Other Chinese cathode brands already listed on the LME include those from Jinchuan, Yantai Cash Industrial, GEM (Jiangsu) Cobalt Industry, Quzhou Huayou Cobalt New Material, Ganzhou Tengyuan Cobalt New Material, and Zhejiang Greatpower Cobalt Materials. With increasing global demand for cobalt, these listings offer greater market access for Chinese producers while contributing to a more balanced global cobalt supply.