Nickel Prices Drop Amid US 'Liberation Day' Tariffs

Nickel

Global Market Faces Recession Fears as Tariffs Hit Nickel Prices

Nickel prices on the London Metal Exchange (LME) plunged to their lowest levels since October 2020, following the announcement of the US "liberation day" tariffs. These tariffs, introduced on April 2, were more substantial than anticipated, sending shockwaves throughout the base metals markets. As fears of a global recession intensified, the broader base metals, equities, and commodities markets experienced a sharp decline.

The US government imposed a 10% tariff on all trading partner countries effective April 5. Additionally, higher tariffs were set for countries with significant trade deficits with the US, scheduled to take effect from April 9. The uncertainty surrounding the tariffs, along with their broader impact, has contributed to confusion and panic selling among traders.

Uncertainty Fuels Market Turmoil

The nickel market has been particularly volatile in the wake of these developments. The initial drop in nickel prices following the announcement of the tariffs was relatively modest at 1%. However, prices plunged further, losing 3.6% on April 4 and a significant 4.9% on April 5, dropping to $14,550 per ton. This sharp decline can be attributed to China's retaliatory tariffs, which placed a 34% duty on US exports.

Nickel prices have now fallen to their lowest point since October 2020, and the situation remains dire for many producers. Reports suggest that more than three-quarters of refined nickel production is currently operating at a loss, given the prevailing market conditions. Additionally, class 1 nickel production costs in Indonesia, a key supplier, are reported to exceed $15,000 per ton, indicating that current nickel prices are unsustainable for many producers.

Tariff Confusion Exacerbates Nickel Sell-Off

The sell-off in nickel was further aggravated by the confusion surrounding the application of the tariffs. Market participants were uncertain whether LME-grade nickel would be exempt from the new tariffs. Official documents confirmed that a baseline 10% tariff would not apply to HS Code 7508, which pertains to "Other Articles of Nickel." However, the critical HS Code 7502, which covers "unwrought nickel" used for LME-deliverable class 1 nickel, did not receive similar exemption.

Some traders have already begun moving nickel shipments out of the US to avoid the uncertainty, with large European trading groups indicating that they are rerouting cargoes to Rotterdam, UK. Meanwhile, nickel imports into the US from Canada, the country's main supplier, have continued to flow without tariffs under the US-Mexico-Canada Agreement (USMCA). However, the future of this arrangement remains unclear, as the upcoming April 9 tariff changes could subject Canada to the same 10% tariff as other countries with trade deficits.

Outlook for Nickel Producers and the Market

The nickel market remains in a precarious situation. With continued confusion around the tariff details and recession concerns gripping major economies, it’s unclear how long the current market conditions will last. As more tariff structures are implemented and market players react to these changes, the global nickel supply chain faces increasing uncertainty.

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.

Supply Cuts to Rebalance Nickel Market, Says Nornickel

Russian metals giant Norilsk Nickel (Nornickel) has projected a long-term rebalancing of the global nickel market, driven by price-induced closures of nickel operations, particularly in Australia and New Caledonia. These supply cuts, combined with a steady rise in demand, are expected to increase the floor price of nickel from its current range of $16,000-17,000 per ton.

Short-Term Nickel Market Outlook

In the short term, Nornickel holds a neutral stance on nickel prices. While supply cuts from loss-making operations are underway, the growing supply of Chinese Class 1 nickel—most of which is being delivered to the London Metal Exchange (LME) warehouses in Asia—has kept prices in check. The nickel market experienced a surplus of 75,000 tons in the first half of 2024, with exchange stocks rising by 40,000 tons during the same period. Nornickel estimates the global surplus will remain at 100,000 tons annually for both 2024 and 2025.

Impact of Falling Prices on Nickel Production

The sharp decline in nickel prices this year, which saw the metal dip below $16,000 per ton, has put significant pressure on producers. Nornickel estimates that over half of the world’s nickel production is currently generating only marginal positive cash flow. Approximately 400,000 tons of global nickel capacity is either idle or at risk of closure. However, the company expects a steady rise in nickel demand, driven by stainless steel production in China, a recovery in Indonesia, and continued growth in the aerospace, oil and gas, and military sectors, which require specialized alloys and superalloys.

Palladium Market Outlook and Financial Challenges

In addition to its outlook on nickel, Nornickel anticipates easing in the palladium market’s destocking by the end of the year. The company expects palladium to remain in deficit, with a shortfall of 400,000 ounces and a 2% year-on-year drop in demand to 9.6 million ounces.

Nornickel’s financial results for the first half of 2024 reflect the challenges faced by the nickel and palladium markets. Revenue dropped by 22% to $5.606 billion, while EBITDA declined by 30% to $2.35 billion. Net profit fell by 23% to $829 million. The group attributed these declines to logistical disruptions, including issues in the Red Sea, and complications arising from Western sanctions on Russia.

Copper Market Outlook

Nornickel remains cautiously optimistic about copper prices in the medium term, although near-term signals are bearish due to persistent inflation in Europe and the U.S., and deflationary concerns in China, the world's top copper consumer.

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.

South32 exits nickel market with Cerro Matoso sale to Corex

South32

South32 exits nickel market with the sale of Cerro Matoso to Corex. The deal is valued at up to $100 million. It ends South32’s nickel exposure after a strategic review. However, closing requires regulatory approvals and conditions.

Deal structure and recent performance

Corex will pay up to $80 million, linked to future nickel prices. It may pay up to $20 million, tied to project permits. Therefore, proceeds depend on both the market and permitting outcomes.

Cerro Matoso produced 40,600 tonnes of payable nickel in 2023–24. The mine expected 35,000 tonnes in 2024–25, per April guidance. Production results for 2024–25 remain undisclosed.

Strategy shift and market context

South32 exits nickel market to concentrate on copper and zinc growth. Meanwhile, it continues manganese mining in Australia and South Africa. It resumed Gemco exports in May after flood damage earlier in 2024. As a result, portfolio risk tilts toward copper, zinc, and manganese.

Industry peers are also reshaping portfolios under weak nickel prices. Anglo American plans to spin off nickel, coal, and diamonds. Therefore, South32 exits nickel market in line with sector consolidation.

The Metalnomist Commentary

Full divestment simplifies South32’s capital allocation and cost focus. Execution risk now centers on closing conditions and handover stability. Watch Corex’s investment plan and ferronickel margins through 2025.

US Nickel Market Flat Amidst Excess Inventories

US Nickel

The US spot premiums for refined nickel have remained stagnant this week due to sluggish demand and abundant consumer inventories.  This market flatness reflects a cautious approach from buyers who are well-stocked for the near future.

Premium Assessments and Demand Outlook

Nickel premiums for full truckload melting grade, 4x4-inch cathodes, were assessed at 60-65¢/lb, while premiums for briquettes were assessed at 30-35¢/lb. Both remained unchanged from the previous week.  Many consumers are currently holding excess inventories, which is limiting nickel demand forecasts through the first quarter of the year.  Market sources suggest that most buyers are unlikely to actively participate in the spot market for additional nickel until early summer.  This points to a period of potentially subdued activity in the US nickel market.

Global Supply Dynamics and Price Outlook

Despite the current inventory surplus, potential supply-side changes could impact the market later in the year.  Indonesia, the world's largest nickel producer, is reportedly considering cutting production by up to 35%, according to sources.  Such a significant reduction could strain global nickel supply and potentially help nickel prices recover after they reached a four-year low in December.  However, overall, nickel is still expected to be in surplus this year. 

Global nickel stocks in London Metal Exchange (LME) warehouses totaled 164,310 metric tonnes (t), up 1.1% from 162,474t the previous week. Inventories have increased significantly in 2024, rising by 150% or 96,378t.  

The LME nickel daily cash month-to-date average for January is $15,055/t ($6.83/lb), compared to the full-month December average of $15,471/t ($7.02/lb). The official three-month LME nickel settled at $15,450/t on Thursday, up 1% from $15,295/t a week ago on January 2nd.  These price fluctuations and inventory levels will continue to be closely watched by market participants.

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.

US Nickel Premiums Hold Steady as Buyers Await Market Clarity

US Nickel

US nickel premiums remained stable this week as market activity waned, with spot market buyers largely sitting out until the first quarter of 2025.

Nickel Premiums Unchanged Amid Market Lull

Spot premiums for refined nickel in the US held steady this week:

• Full truckload melting grade, 4x4-inch cathodes: Assessed at 60-65¢/lb.
• Briquettes: Assessed at 30-35¢/lb.

The unchanged premiums reflect subdued market activity, with no spot sales reported. Industry insiders expect this trend to persist through December, potentially extending into the late first quarter of 2025. Reduced order volumes from specialty stainless producers have further softened demand.

LME Nickel Prices and Stock Levels

Global nickel stockpiles in London Metal Exchange (LME) warehouses increased by 3.4%, reaching 165,384 metric tonnes, up from 159,966 tonnes the previous week. This rise in inventories aligns with the broader slowdown in demand.

The LME nickel daily cash month-to-date average for December was $15,700/t ($7.12/lb), down from November’s average of $16,740/t ($7.14/lb). The official three-month LME nickel price settled at $15,955/t on Thursday, reflecting a 0.5% week-over-week decrease.

Voisey's Bay Expansion: A Major Development

In a noteworthy development, Brazilian mining giant Vale announced the completion of its Voisey’s Bay mine expansion in Canada. The transformation from open-pit to underground mining enables an annual nickel production capacity of 45,000 tonnes.

• The project, which began in 2018, cost $2.94 billion and significantly bolsters nickel supplies, particularly to the US market.

As Voisey's Bay ramps up production, it is expected to play a key role in stabilizing supply chains amid evolving market dynamics.

Indonesia Carbon Market CBAM Strategy Targets Green Nickel and Stainless Steel Future

Indonesia Carbon

Indonesia is accelerating its carbon market development in coordination with the European Union ahead of the 2026 CBAM rollout. The Indonesia carbon market CBAM strategy aims to help domestic producers avoid punitive tariffs by establishing a mandatory emissions trading system (ETS) and promoting decarbonization.

ETS and Green Industrial Strategy in Development

Indonesia’s Ministry of Industry is working with the European Commission to design a carbon market aligned with the EU’s Carbon Border Adjustment Mechanism (CBAM). According to Apit Pria Nugraha, Head of the Centre for Green Industry, the goal is to use carbon credits to offset CBAM tariffs for sectors like stainless steel. Although nickel is not directly included in the CBAM, it faces indirect exposure through downstream products.

Indonesia is upgrading furnaces, enhancing ESG standards, and preparing export-focused green incentives. These include preferential treatment for certified green products and financing tools to support innovation. Nugraha emphasized that companies meeting CBAM and ESG targets early will benefit from price premiums and stronger global partnerships.

Nickel Industry Prepares for ESG-Driven Market Shift

Indonesia’s nickel sector, vital to the EV battery supply chain, is adapting quickly to ESG scrutiny. Nickel Industries, a major producer, announced plans to reduce its carbon footprint by deploying solar power and heat recovery systems in high-pressure acid leaching operations. The company’s carbon intensity is projected at 6.97 tonnes of CO₂ per tonne of nickel, nearly half the industry average.

M. Muchtazar, Head of Sustainability at Nickel Industries, noted that ESG is now a top competitive factor. Compliance with EU carbon regulations is no longer optional as automakers demand cleaner supply chains for EV materials.

CBAM to Reshape Global Trade Dynamics

CBAM will act as a de facto import tariff on high-emission goods entering the EU. Simon Goess of Carboneer estimated that importers of 85,000 tonnes of pig iron, ferro-nickel, and crude steel could face up to €40 million in charges by 2034. As CBAM expands to include Class 1 nickel and indirect emissions, producers must lower carbon intensity to remain globally competitive.

Nugraha concluded that “green nickel” is more than a buzzword—it’s a strategic imperative for Indonesia’s industrial future.

The Metalnomist Commentary

Indonesia’s proactive stance on carbon pricing and ESG compliance signals a significant policy shift. By integrating CBAM-aligned mechanisms and promoting low-carbon nickel, Indonesia positions itself as a preferred supplier in the evolving global metals supply chain.

Indonesian Nickel Ore Prices Surge Amid Tight Supply

Indonesian Nickel

Weather Disruptions and Mine Closures Drive Market Shift

Indonesian nickel ore prices have risen sharply in 2025 as domestic supply constraints tighten. Prices for 1.6pc nickel content ore with 35pc moisture reached $53/wet metric tonne (wmt) in May, up from $44/wmt in January, driven by stronger premiums. The surge is linked to extended heavy rains on Sulawesi Island since November 2024, which disrupted operations in key hubs such as the Morowali Industrial Park. Sulawesi holds about 70pc of Indonesia’s total nickel ore resources.

The government’s order for state-owned PT Aneka Tambang (Antam) to halt mining in West Papua’s Raja Ampat — a marine protected area — further tightened supply. The site, with a 3mn wmt/yr quota, produces high-grade nickel ore. Limited availability has shifted mining firms toward tender-based sales rather than bilateral deals, while large buyers offer $1–2/wmt premiums to secure volumes over 100,000wmt.

Upstream-Downstream Price Divergence

Despite the rise in nickel ore prices, downstream products have seen declines. China’s stainless steel 304 cold-rolled coil prices fell to 13,250 yuan/t in May from 13,650 yuan/t in March. Indonesia’s nickel pig iron (NPI) export prices dropped to $116/metric tonne unit (mtu) in June from $124.50/mtu in March. This divergence stems from the upstream market remaining a seller’s market since 2023, as ore supply growth lags behind expanding nickel products capacity.

Indonesia’s nickel products output — including NPI, ferronickel, mixed hydroxide precipitate, and matte — is projected to rise to 2.49mn t in nickel metal equivalent in 2025, up from 1.83mn t in 2023. Consequently, ore demand could increase from 200mn wmt to 280mn wmt in the same period.

Rising Imports from the Philippines

With local ore insufficient, Indonesian producers have increased nickel ore imports from the Philippines since mid-2023. Imports surged to nearly 10mn t in 2024, representing around 6pc of total demand, and are on track for another increase in 2025. Shipments in January–April already exceeded imports in the first half of 2024.

Philippine ore is essential for blending with Indonesian ore to achieve the required silicon and magnesium ratios for different processing technologies, including RKEF and HPAL. Changing ore specifications after 15 years of intense mining in Indonesia have made such blending critical to meet production needs.

The Metalnomist Commentary

Indonesia’s nickel ore market illustrates how environmental conditions and policy decisions can shift global supply chains. As upstream prices climb despite downstream weakness, reliance on Philippine imports will likely deepen, reshaping trade flows and influencing pricing power in the nickel sector.

Canada Nickel Secures Ontario Grant for New Nickel Processing Facility

Canada Nickel

Ontario Supports Canada Nickel’s Nickel Processing Expansion

Canada Nickel has received a C$500,000 ($349,000) grant from Ontario’s Critical Minerals Innovation Fund. The funding will support the company’s efforts to complete a feasibility study for a new nickel processing facility near Timmins, Ontario.

CEO Mark Selby confirmed that the feasibility study is set to take place later this year. The study will refine project costs, with current estimates requiring C$400 million for full development.

Production Goals and Market Focus

The upcoming facility aims to produce over 75,000 metric tonnes per year of nickel. This figure is slightly lower than the initial target of 80,000 t/yr. The plant is expected to begin operations in late 2027.

It will produce 98% purity nickel-cobalt material, serving the stainless steel, alloyed steel, and electric vehicle (EV) battery markets. This aligns with growing demand for high-purity nickel, particularly in the EV sector, which relies on nickel-rich cathode materials.

Canada’s Role in the Global Nickel Market

The Canadian government continues to invest in critical mineral projects. Ontario’s funding highlights the region’s commitment to strengthening domestic nickel supply chains. This project could boost Canada’s position as a key supplier in the global nickel and battery metals market.

With rising demand for sustainable nickel processing, this facility could play a major role in future clean energy technologies.

Weak NCM Demand Restrains Nickel Consumption Growth in China

Lygend

China’s nickel consumption growth has been constrained this year, primarily due to weak demand in the nickel-cobalt-manganese (NCM) cathode active material (CAM) sector and the increasing market dominance of lithium-iron-phosphate (LFP) CAM.

NEV Battery Market Trends

Despite a 37% year-on-year increase in China’s new energy vehicle (NEV) battery production from January to September, NCM battery growth lagged at 19.2%, while LFP surged by 45.6%, according to the China Innovative Alliance of Automotive Battery Industry.

• NCM precursor output grew by 4%.
• NCM CAM production rose by 10%, highlighting a slower growth trend compared to downstream NEV battery production.
• Nickel sulphate output is projected to decline by 1%, even though total supply is expected to rise by 6% due to increased imports.

The discrepancy in growth rates between upstream, midstream, and downstream sectors is expected to stabilize next year as inventories decline and buying interest increases.

Rising Imports of MHP and Matte

China’s imports of mixed hydroxide precipitate (MHP) and matte, key feedstocks for nickel sulphate and class I nickel production, have risen sharply:

• MHP Imports: Up 17% to 1.07 million tons during January-September, with Indonesia accounting for 57% growth due to increased capacity from Chinese companies such as Lygend’s ONC, GEM’s QMB project, and Huayou’s Huafei facility.
• Matte Imports: Increased by 61% to 341,494 tons, driven by the ramp-up in new capacities.

Transition in Nickel Matte Production

A significant portion of the matte imports consists of low-grade matte (20% nickel content), which is further refined into high-grade matte (70% nickel content) in China for nickel sulphate or cathode production. However, some matte producers have shifted focus to producing nickel pig iron (NPI) due to its higher profit margins.

Nickel Metal Output Outlook

While nickel sulphate production is forecast to dip, China’s overall nickel metal output is expected to surge by 34%, reaching 320,000 tons in 2024. This increase underscores the country’s reliance on imported feedstocks and growing domestic capacity to meet demand.

Future Prospects

As inventories dwindle and buying interest rebounds, 2024 is likely to see a narrowing of growth disparities across the supply chain. However, China’s nickel market remains under pressure from fluctuating demand patterns, shifts in feedstock sourcing, and competition between NCM and LFP technologies.

Indonesia Mulls Nickel Mining Quota Cuts Amid Price Slump

Indonesia Nickel mining

Government Considers Limiting 2025 RKABs to Stabilize Nickel Market

Indonesia is contemplating a reduction in 2025 nickel ore mining quotas, known as RKAB work plans. This action aims to counteract the current nickel price downturn. Market participants suggest a potential quota reduction to 150-200 million wet metric tonnes (wmt). The government may also revoke RKABs for companies failing to meet environmental standards. However, no official decision has been made regarding the review of approved RKABs.   

Potential Market Impacts and Smelter Concerns

The Ministry of Energy and Mineral Resources (ESDM) has approved 292 RKABs for 2025. The total approved volumes are estimated to be less than 250 million wmt. A significant cut to 150 million wmt could decrease global nickel production by 30-40%. Such a reduction may stabilize prices. However, it could also undermine market confidence. LME nickel prices have fluctuated, recently rebounding above $15,000/t. Smelters fear that quota cuts may not adequately supply their operations. To secure ore, market participants might increase imports. Notably, the Philippines supplied 10 million t of nickel ore to Indonesia in 2024. Yet, imported ore results in higher production costs, impacting smelter margins.

LME Fined £9.2M by UK Regulator Over 2022 Nickel Market Crisis

LME

FCA Cites Inadequate Controls and Staffing Failures During Historic Short Squeeze

FCA Penalizes LME for Mishandling Nickel Price Surge

The London Metal Exchange (LME) has been fined £9.2 million ($11.9 million) by the UK Financial Conduct Authority (FCA) following its investigation into the March 2022 nickel short squeeze. The FCA concluded that the exchange lacked sufficient systems and controls to manage extreme volatility during the weeklong price spike, when nickel prices surged past $100,000 per tonne.

Between March 4–8, 2022, the nickel market experienced unprecedented stress. The crisis was triggered by massive over-the-counter short positions held by Tsingshan, a leading Chinese nickel producer. In response, the LME suspended nickel trading for eight days and controversially canceled all trades executed on March 8.

Regulators Cite Lack of Price Bands and Untrained Staff

The FCA identified LME’s failure to use automatic volatility controls, such as price bands, as a major weakness. Furthermore, the exchange’s decision-making process was too reliant on senior staff who were unavailable during Asian trading hours, when the crisis escalated.

At the height of the squeeze, junior operations staff—lacking crisis training—disabled price bands instead of escalating the situation. This action allowed nickel prices to rise faster than they should have. The exchange’s failure to report abnormal activity to its Hong Kong office worsened the volatility.

LME Implements Reforms, Wins Litigation Battles

The LME accepted the FCA’s findings and qualified for a 30% fine reduction. Since the crisis, the exchange has introduced daily price limits across all metals and improved oversight of OTC positions. These reforms aim to prevent similar breakdowns in market order.

Legal fallout followed the LME’s decision to cancel trades, with Elliott Management and Jane Street suing for losses of $456 million and $15 million, respectively. However, the UK High Court ruled in LME’s favor, and the UK Supreme Court recently denied Elliott permission to appeal.

The FCA’s decision underscores the critical need for robust trading oversight, especially during periods of extreme market stress.

Eramet and BASF Cancel $2.6 Billion Nickel Smelter Investment in Indonesia

French mining company Eramet and German chemical giant BASF have decided to cancel their planned joint investment in a nickel-cobalt refining complex in Weda Bay, Indonesia. This decision, announced on June 24, 2024, was made after a thorough evaluation of the project's feasibility and the current market conditions​.

The primary reason for the cancellation is the anticipated short-term oversupply of nickel, driven by a temporary stagnation in electric vehicle (EV) market demand, a phenomenon often referred to as the "chasm." BASF explained that with the global supply of nickel for EV batteries improving, the necessity for their investment in the Indonesian facility has diminished​​.

Eramet, while canceling this specific project, mentioned that it will continue to explore potential investments in the nickel EV battery value chain in Indonesia and will update the market when appropriate. The initial plan, announced in January 2023, aimed to invest $2.6 billion to build a high-pressure acid leach (HPAL) facility designed to produce 67,000 tons of nickel and 7,500 tons of cobalt annually​​.

Indonesian officials noted that the decision might also have been influenced by the existing and planned HPAL facilities in the country, which would make it easier to obtain mixed hydroxide precipitate (MHP) without needing substantial new capital expenditure​​.

This development reflects broader trends in the global nickel market, where Indonesia's share of nickel mine supply has surged from 26% in 2018 to 55% in 2023, with the production of nickel intermediates more than doubling over the same period. Despite the anticipated 8.7% increase in global nickel production this year, demand growth is expected to lag at around 4%​​.

European Nickel Premiums Hold Steady Amid Soft Physical Demand

Nickel Manufacturing

Traders Report Limited Interest and Assessing Impact of US Tariffs

European nickel premiums remained stable over the past week, with traders reporting subdued physical demand. Only near-term requirements are currently being pursued, as the market continues to evaluate the effects of US tariffs.

Soft Demand and Limited Trading Activity

Physical nickel demand has remained weak, with many buyers postponing purchases due to ongoing uncertainty about the impact of US tariffs. As a result, the number of deals and offers has remained within the range of previous assessments. Nickel premiums for non-Russian cathodes and briquettes have experienced slight downward pressure, reflecting limited buyer activity and increased competition among large European trading groups. The overall supply of nickel remains ample, which further dampens price movements.

Nickel Market Responds to Tariff Uncertainty and Supply Concerns

Benchmark nickel on the London Metal Exchange (LME) saw a 2% increase this week, reaching $15,735 per tonne. This rise is attributed to short covering, uncertainty surrounding US tariffs, and reports of a potential reduction in ore supply from the Philippines. Despite the flat premiums, there are signs of upward movement in the broader nickel market due to these factors.

On-warrant nickel stocks showed a slight decrease of 0.12% this week, with a total of 161,958 tonnes in inventory. Nickel stocks in Rotterdam increased by 300 tonnes, reaching 31,902 tonnes, with significant portions consisting of bagged briquettes, pellets, and full-plate cathodes. Nickel spreads from nearby cash to three-month contracts were in contango at $226 per tonne, slightly up from $218 per tonne last week.

Chinese Cobalt Prices Expected to Decline Further in 2025 Amid Rising Supply and Weak Demand

Chinese Cobalt Manufacturing

Oversupply and Weak Demand to Push Cobalt Prices Lower

The Chinese cobalt market is set to experience further price declines in 2025, as increasing nickel and copper production, from which cobalt is a by-product, leads to an oversupply that buyers are struggling to absorb.

Currently, Chinese-origin cobalt metal traded in Europe has already seen significant pressure due to a lack of floor pricing on raw materials, a trend expected to persist into the new year. Market insiders suggest that cobalt prices could drop below $9/lb, as fully integrated Chinese producers view cobalt as a credit to their primary metal production, particularly nickel and copper.

For these refiners, cobalt is a secondary concern. As one trading firm explained, some Chinese producers operate with production costs as low as $4,000 per ton while selling at $9,000 per ton. Even if they incur a $50 million loss on cobalt, they may still profit significantly from copper production, which can generate up to $700 million in gains.

Chinese Refiners Likely to Continue Production at a Loss

Unlike non-Chinese refiners, which may curtail supply if cobalt prices fall below $9/lb, some Chinese integrated mining firms and refiners could continue refining hydroxide into metal at a loss-making $7-8/lb.

While there is speculation that some Chinese metal producers may attempt to negotiate floor prices in their contracts, it remains uncertain whether these efforts will succeed. Market participants are closely watching how these negotiations unfold, as they could provide some level of price support if successful.

Global Nickel and Copper Growth to Sustain Cobalt Oversupply

The primary factor driving cobalt’s oversupply is the continued expansion of nickel and copper production, as cobalt is a by-product of both metals.

• Nickel production is set to rise again in 2025 with the launch of new Class 1 nickel refineries in China and Indonesia. This will likely keep London Metal Exchange (LME) three-month official nickel prices within the $15,000-17,000 per ton range, significantly lower than the $30,000 per ton peak in early 2023.

• Copper production is also projected to increase due to expansions at mines such as Kamoa-Kakula in the Democratic Republic of Congo (DRC). Although cobalt sales represent only a minor portion of copper mining revenues, producers still aim to extract value from it as a credit.

Weakened Demand from EV and Chemicals Sectors Further Pressures Prices

While cobalt demand in China has surged by 40%, this has not been enough to counteract weakening demand in other regions, particularly in Europe:

• The electric vehicle (EV) sector in Europe has slowed down, leading to reduced demand for cathode active materials like cobalt.

• The European chemicals industry, particularly in Germany, has struggled due to rising energy costs and broader economic challenges.

Even if prices do increase, China has ample spare refining capacity and could use third-party tolling arrangements to process hydroxide into metal, further maintaining downward price pressure.

Peak Oversupply May Be Near, But Price Recovery Remains Uncertain

Some market participants believe that cobalt hydroxide oversupply may have already peaked. The shift towards lithium iron phosphate (LFP) batteries, which do not use cobalt, has significantly impacted the demand for nickel-cobalt-manganese (NCM) battery chemistries, leading to lower demand for cobalt sulfate and cobalt hydroxide.

However, despite this potential supply peak, weak demand across key industrial sectors suggests that cobalt prices are unlikely to see a strong recovery in the near term.

Conclusion

In 2025, Chinese cobalt prices are expected to remain under pressure due to rising nickel and copper production, ongoing oversupply, and weak demand from the European EV and chemicals sectors. While some believe that the cobalt market may be nearing peak oversupply, prices are unlikely to experience significant upward momentum unless demand rebounds sharply or supply reductions occur.

Lifezone Adjusts Kabanga Nickel Mine Plan Amid Market Pressures

Lifezone Metals

Lifezone Condenses Kabanga Nickel Mine Strategy

Lifezone Metals will simplify its Kabanga nickel project in Tanzania to adapt to ongoing nickel price volatility. The company will pursue full-scale construction of a 3.4mn t/yr underground mine and concentrator rather than a phased approach. A hydromet demonstration plant in Kahama, 350km away, will precede a full-scale ecological refinery using hydrometallurgical technology.

Market Dynamics Prompt Strategic Shift

The decision to shift from phased development stems from weak global nickel prices and rising Indonesian supply. Nickel mine production dropped by 50,000t globally in 2024, while Indonesia increased output by 170,000t to 2.2mn t. Lifezone aims to complete a definitive feasibility study for Kabanga by mid-2025, reflecting the new plan.

Resource Update and PGM Recycling Focus

Measured and indicated resources at Kabanga rose 7.3pc to 46.8mn t, while inferred resources fell by 35.4pc. Grades remain strong: 2.09pc nickel, 0.29pc copper, and 0.16pc cobalt for measured and indicated resources. Meanwhile, Lifezone is advancing a joint venture with Glencore to recycle platinum group metals (PGMs) from catalytic converters in the US.

The Metalnomist Commentary

Lifezone’s pivot illustrates the real-time flexibility required by mining companies in a volatile nickel market. With oversupply pressuring prices, optimizing scale and timing becomes critical. Simultaneously, its investment in hydrometallurgical refining and PGM recycling reflects a strategic bet on sustainability and future-facing technologies.

SHFE Bolsters Nickel Futures Market with New Brand Listings

The Shanghai Futures Exchange (SHFE)

The Shanghai Futures Exchange (SHFE) has recently enhanced its nickel futures market by approving the registration of two new nickel brands, HUAYOUgx and CNGR, on 20 December. This decision marks a significant step in increasing market liquidity and underscores the growing influence of Chinese brands in the global metal markets.

New Additions to the Nickel Futures Market

HUAYOUgx is produced by Huayou, one of China's leading battery metals and materials producers, at its subsidiary in Yulin, located in the Guangxi province. This brand boasts a registered annual capacity of 30,000 tonnes per year. Similarly, CNGR, produced by CNGR's subsidiary in Quinzhou, Guangxi, has a registered capacity of 25,000 tonnes per year. These additions are part of SHFE's broader strategy to enhance the dynamics of its nickel futures offerings.

In 2024, SHFE approved four new brands, adding a total of 121,000 tonnes per year of newly registered capacity. This initiative is aimed at improving the liquidity of nickel trading on the exchange, making it more attractive for investors and industry stakeholders.

International Recognition and Future Prospects

Both HUAYOUgx and CNGR have not only secured approval from SHFE but also received green lights from the London Metal Exchange (LME) through its fast-track system earlier this year. The fast-track system expedites the process of listing new metal brands, facilitating quicker entry into the market.

Additionally, the LME is currently reviewing an application from another Chinese nickel producer, Jien, submitted on 25 November. Approval of Jien's brand would further extend the roster of Chinese and Asian nickel brands on LME, potentially increasing the total registered capacity for new brands from these regions to 126,600 tonnes and 176,600 tonnes per year, respectively.

Indonesian Cobalt Production Capacity Set to Double by 2027

Indonesian Cobalt

Indonesian cobalt production capacity will more than double to 114,000 tonnes by 2027 from 55,000 tonnes in 2024, according to National Economic Council member Septian Hario Seto. The expansion comes from Indonesia's high-pressure acid leach (HPAL) operations, which process nickel laterite ores to extract both nickel and cobalt. However, Indonesian cobalt production capacity growth will likely plateau after 2027 due to rising project costs and slower-than-expected nickel consumption growth.

HPAL Operations Drive Cobalt Output Growth Despite Rising Costs

Indonesia's cobalt capacity expansion relies heavily on HPAL technology, which extracts cobalt as a byproduct of nickel processing operations. China Nonferrous Metals Industry Association's Xu Aidong confirmed that capacity increases will probably stabilize given mounting economic pressures. Meanwhile, rising sulfur prices used in hydrometallurgical production lines are increasing HPAL project costs significantly.

Mixed hydroxide precipitate (MHP) production maintains 30-40% profit margins even with nickel prices around $15,000 per tonne, partly due to cobalt content value. Indonesia exported nearly 1.56 million tonnes of MHP last year, with cobalt exports reaching approximately 44,350 tonnes. Therefore, Indonesian cobalt production remains economically viable despite commodity price volatility.

DRC Export Ban Creates Market Uncertainty and Technology Shifts

The Democratic Republic of Congo's cobalt export ban threatens to drive prices higher while potentially reducing long-term cobalt demand through technology adaptation. Seto warned that sustained export restrictions could backfire by accelerating battery chemistry changes to reduce cobalt content. As a result, the industry witnessed massive adoption of nickel-cobalt-manganese (NCM) 811 technology during 2017-2018 price spikes.

Indonesia processes MHP directly into precursors without crystallizing nickel sulfate first, streamlining production efficiency and reducing costs. The country views cobalt as inseparable from nickel production rather than an independent mineral resource. However, Indonesia recognizes its responsibility as a major producer to ensure reliable global supply chains.

Seto emphasized that Indonesia's position on nickel mirrors the DRC's influence on cobalt markets, requiring careful market management. Major producers must balance supply control with market reliability to avoid being perceived as unreliable suppliers. Consequently, both countries face pressure to maintain sufficient global supply while maximizing domestic value addition.

The Metalnomist Commentary

Indonesia's strategic approach to cobalt as a nickel byproduct positions the country advantageously in global battery supply chains while the DRC's export restrictions create market uncertainty. The doubling of Indonesian cobalt production capacity by 2027 could provide crucial supply diversification for battery manufacturers seeking alternatives to DRC sources, though technology shifts toward lower-cobalt chemistries may limit long-term demand growth.