Nickel Market Surplus 2025 to Reach 198,000t on Indonesian Output Growth: INSG

Nickel Factory

Surplus Widens as Global Nickel Supply Outpaces Demand

The nickel market surplus in 2025 is expected to reach 198,000 tonnes, according to the International Nickel Study Group (INSG). This marks an increase from 170,000t in 2023 and 179,000t in 2024, driven largely by continued production expansion in Indonesia across all major nickel product types. Global primary nickel production is forecast at 3.735mn tonnes, while demand lags behind at 3.537mn tonnes.

Indonesia Leads Supply Growth Despite Ore and Royalty Headwinds

Indonesia remains the engine of global nickel supply, despite recent permit issuance delays and the introduction of a new royalty regime based on the Harga Mineral Acuan, a price benchmark tied to LME nickel pricing. The full impact of these changes on mining output is still unclear. Meanwhile, China is also ramping up production of nickel cathode and nickel sulphate, although its nickel pig iron (NPI) output is expected to decline.

Mixed Demand Outlook: Stainless Steel Grows, Battery Demand Slows

The nickel market surplus in 2025 also reflects shifting demand trends. The stainless steel sector is projected to grow further, supporting baseline nickel consumption. However, demand from the EV battery sector is expected to slow due to rising use of non-nickel chemistries and increased adoption of plug-in hybrid vehicles. Still, new ternary cathode projects globally may support medium-term nickel usage recovery.

The Metalnomist Commentary

The projected nickel market surplus in 2025 signals continued pressure on prices. As Indonesia leads global production, market rebalancing may hinge on battery chemistry shifts and Chinese industrial demand.

Nickel Prices Expected to Remain Rangebound in 2025 Amid Market Shifts

Nickel

Nickel prices are projected to stabilize within the $15,000-$18,000/tonne range in 2025, driven by firm nickel ore prices but constrained by growing smelting capacity, particularly in Indonesia. While supply chain dynamics and policy changes in Indonesia could cause short-term fluctuations, the overall outlook remains rangebound.

Nickel Ore Prices: A Key Support

Nickel ore prices have remained elevated throughout 2023, with tight supply driving cif prices to $50/wmt or higher. The constrained ore supply, caused by delays in RKAB (Rencana Kerja dan Anggaran Biaya) approvals and limited mining capacity, has kept premiums high. Despite these challenges, Indonesia’s nickel ore output increased by 14% year-on-year in the first nine months of 2023, according to the International Nickel Study Group (INSG).

The Indonesian government is expected to approve additional RKAB quotas to support the growing hydrometallurgy sector, which primarily produces mixed hydroxide precipitate (MHP) for the EV market. However, uncertainty remains regarding the allocation between hydrometallurgy and pyrometallurgy, which produces nickel pig iron (NPI) and matte from higher-grade ores.

NPI Prices Anchor the Market

Indonesia remains the largest NPI producer, with NPI production costs and processing fees setting the lower bounds for Class 1 nickel prices. Rising energy and ore costs have led producers, including Nickel Industries’ Ranger Nickel project, to raise production cost estimates. In Q3 2024, cash costs reached $11,794/t, reflecting a 4.3% increase from the previous quarter.

Global Market Outlook: Balancing Surplus and Demand

The global nickel market is expected to experience a similar surplus to 2023’s 167,000 tonnes. While demand from stainless steel production is anticipated to grow by 3% in 2025, the outlook for the nickel-cobalt-manganese (NCM) battery sector is less optimistic due to the rising popularity of more affordable lithium-iron-phosphate (LFP) batteries.

China’s introduction of 200,000 t/yr of nickel capacity, relying heavily on Indonesian-produced MHP and matte, will likely shape market conditions. Although producers may face slim profit margins, some will maintain production to secure London Metal Exchange (LME) registration, ensuring liquidity and broader sales opportunities.

Indonesia’s Pivotal Role

Indonesia continues to dominate the nickel supply chain, with policies on RKAB quotas, taxes, and environmental standards closely watched by market participants. Any policy shifts could influence global supply and pricing, reinforcing Indonesia's role as a key player in the nickel market.

China and Indonesia Strengthen Ties in Critical Minerals and Renewable Energy

Strengthen Mineral

China and Indonesia are poised to deepen their cooperation in critical mineral extraction and renewable energy, marking a strategic move as global demand for clean energy technologies continues to grow. The announcement came during Indonesian President Prabowo Subianto's inaugural visit to China from November 8–10. The collaboration emphasizes joint initiatives in new energy vehicles, lithium batteries, and photovoltaics, reflecting the two nations' shared commitment to energy transition and economic synergy.

Strategic Agreements and Investments

During President Prabowo's visit, China reaffirmed its support for Indonesia's energy sector transformation, pledging to pursue "high-quality" partnerships in digital economies, clean energy, and infrastructure development. Addressing a business forum on November 10, Prabowo welcomed increased investment from Chinese enterprises across a range of industries.

Significant agreements were sealed during the visit, including a high-pressure acid leaching (HPAL) project in Sulawesi, jointly developed by Green Eco-Manufacture (GEM) and mining giant Vale Indonesia. This project will produce mixed hydroxide precipitate (MHP), a critical precursor in battery cathode production, further strengthening Indonesia’s position in the electric vehicle (EV) battery supply chain.

Indonesia’s Growing Role in Global Nickel and Aluminium Markets

As the world’s largest nickel producer, Indonesia is central to global EV and battery markets. According to the International Nickel Study Group (INSG), the country's share of global nickel output is projected to rise to 60.6% in 2024 and 62.8% in 2025, driven largely by Chinese-backed projects.

Additionally, Chinese firms are investing heavily in Indonesia's aluminium industry. Nanshan Aluminium is expanding its alumina refinery in Bintan and constructing a 250,000 t/yr refined aluminium plant. Chalco and Tianshan Aluminium are each building 1mn t/yr alumina plants in Indonesia, signaling a robust growth trajectory for bilateral collaboration in critical mineral production.

Key Projects in Renewable Energy

Chinese battery materials company Changzhou Liyuan, in partnership with the Indonesia Investment Authority (INA), is scaling up its lithium iron phosphate (LFP) plant in Indonesia. By 2025, the facility's production capacity is expected to expand to 120,000 t/yr from its current 30,000 t/yr, making it the largest LFP plant outside China.

These developments underscore the growing interdependence of China and Indonesia in renewable energy and critical minerals, aligning their national priorities with global sustainability goals.