Nickel Price Forecast: Can the Metal Survive Persisting Oversupply?

A new round of sanctions against Russian copper, nickel, and aluminum exports announced in mid-April brought hope that nickel may finally end its downturn.

The metal, crucial for producing stainless steel and electric vehicle battery chemistries, has struggled to reverse a downtrend caused by a deluge of nickel supply, primarily from Indonesia.

Since the announcement, nickel has steadily climbed back to the $20,000 per ton level from around $16,000 per ton at the beginning of 2024.

Nickel 1-Year Performance.
Nickel 1-Year Performance. Source: Trading Economics

However, with the market anticipated to remain oversupplied for years, the question arises: can the nickel price defy the odds and maintain its rebound?

We delve into the factors and expert insights that may offer a clearer outlook on nickel price forecasts for 2024, 2025, and beyond.

Key Takeaways

  • Oversupply can persist until 2026 on robust output from Indonesia and China.
  • Nickel price surge could be tamed by sustained excess supply.
  • Persisting low prices may spur further output cuts by miners.
  • Indonesia and China are projected to account for 2/3 of the global refined nickel supply by 2029.
  • Nickel faces competition from other EV battery materials, but clean energy technology supports demand.

Nickel Price Forecast Summary

2024

$16,954 to $18,635

Key Factors:

  • Oversupply to persist
  • Healthy demand from clean technologies
  • Emergence of non-nickel alternative battery material

2025

$16,000 to $18,500

Key Factors:

  • Excess global supply to remain
  • Mining production cut

2026 – 2027

2026: $15,000 to  $18,250

2027: $15,000 to $18,426

2028: $18,940

2029: $19,312

Key Factors:

  • Excess global supply to diminish
  • Strong growth of clean energy application

Nickel Price 2023: Supply Deluge, Slowing Demand Cap Prices

After skyrocketing to $100,000 per ton in early March 2022 due to a significant short squeeze following Russia’s late February invasion of Ukraine, the nickel price gradually cooled down.

Market fundamentals — supply and demand dynamics — are back to drive the price of the metal used in stainless steel, electric vehicle batteries, and energy storage. However, the supply side kept the nickel price underperforming in  2023.

The main culprit is Indonesia’s ever-growing refined nickel supply.

The nickel price opened 2023 at $31,300 per ton in early January, but it consistently went downhill as the year progressed due to concerns about Indonesian nickel supply and weak demand.

Indonesia has attracted significant foreign investment in nickel processing since it banned nickel ore exports in 2014 to spur the domestic smelting and refining industry. This move is part of a broader strategy to develop an integrated electric vehicle ecosystem, from mines to the production of nickel-based lithium-ion EV batteries.

However, this has led to a substantial rise in both mined and refined nickel output from the Southeast Asian nation.

The US Geological Survey (USGS) shows that Indonesia’s mined nickel output jumped more than 13% to 1.8 million tons in 2023 from 1.58 million tons in 2022 as new production lines emerged. The country now accounts for half of global nickel output, making it the world’s top producer.

Indonesia produces nickel pig iron (NPI), a low-grade ferronickel used mainly for stainless steel. The country exports most of the NPI to China because local demand is limited. As more new capacity comes online, Indonesia has more supply to ship to the overseas market.

Simultaneously, nickel demand weakened as a property crisis dragged China’s post-pandemic economic recovery. This resulted in the slowing growth of EV production, as China, the world’s biggest EV producer, reduced subsidies for purchasing new EVs.

In addition, global EV battery overcapacity contributed to dampening nickel demand. According to CRU, EV battery production reached 1 Terawatt hour (Twh), exceeding the demand of 65 Gigawatt hours (GWh).

In 2023, the nickel price dropped about 42%. It briefly touched the year’s lowest price at $16,060 before closing at $17,150/ton at the end of December 2023.

Nickel 5-Year Performance. Source: Trading Economics
Nickel 5-Year Performance. Source: Trading Economics

Factors That Make or Break Nickel in 2024

At the time of writing on 20 May, nickel was trading at $21,708/ton, gaining over 20% year-to-date (YTD), but it has fallen 5% in the past 12 months.

Will the nickel price maintain its gain? We explore factors that will influence the nickel prices in 2024 and beyond.

Indonesian Nickel to Keep Market Oversupply

The nickel price is unlikely to find relief from the current oversupply as Indonesian producers persist in ramping up their robust supply, poised to keep flooding the market not only this year but also in the foreseeable future.

Along with China, refined nickel output from Indonesia is projected to keep a 109kt surplus in the market in 2024, down from 169kt in 2023 but higher than 98kt surplus in 2022, based on the International Nickel Study Group’s (INSG) forecast released in April.

Daria Efanova, the Head of Research at Sucden Financial, said in a webinar on 17 April that Indonesia’s smelters operate at lower costs than the rest of the world, which enables the country to keep its output. According to the London-based brokerage, the average production cost in Indonesia is $15,000/ton, lower than the global cost average of $16,000.

Efanova said:

“Indonesia is not necessarily trying to move the market in a certain way. What they’re trying to do, they’ve been obviously preparing for the EV trend for quite a while, and that’s something we will continue to see over the longer term. Indonesia will keep producing very robust levels.”

The Australian Government’s Office of Chief Economist (OCE) in its March report predicted the global refined nickel production to grow 4.4% annually over its outlook period from 2024 to 2029.

Indonesia and China are expected to account for 75% of the global refined nickel supply by 2029, with each country increasing its annual capacity by 500,000 tons.

ANZ Research calculated that 650kt of capacity from Indonesia is expected to come online in the next three years and over 1mt before the end of the decade.

OCE estimated the global nickel market could remain well-supplied until 2026.

Meanwhile, ANZ Research analysts Daniel Hynes and Soni Kumari, in their March nickel price predictions, suggested that the nickel market’s oversupply could last two to three years.

Ban on Russian Metals

On 12 April, the US and UK announced new sanctions against Russian metals, targeting the country’s $40 billion exports of copper, nickel, and aluminum. The new sanctions add to a list of bans against Russia’s commodities, from oil, gas, and steel to gold, to cut revenue used by the Kremlin to finance its war in Ukraine.

Following the announcement, the London Metal Exchange (LME) blocked the trading of copper, nickel, and aluminum produced by Russia. At the same time, the Chicago Mercantile Exchange (CME) banned Russian aluminum from its platform.

While the sanction bans the delivery of these metals to LME warehouses, Russia can still sell them to buyers outside the UK and the US. Metals that were already stored in LME warehouses before the sanction can still be legally traded.

Based on data from the US Geological Survey, Russia accounts for 5.55% of global nickel mined output. However, the country is also one of the major producers of near-pure Class 1 nickel (containing 99.8% nickel) used for producing EV batteries and other energy storage cells. Class 1 is also the nickel quality accepted by LME.

Analysts expected the sanction would not cause a significant supply disruption, although it could increase short-term volatility.

ING Head of Commodity Strategy Warren Patterson and Commodity Strategist Ewa Manthey said in a note on May 9:

“While the move does not significantly change supply fundamentals, it has led to uncertainty and volatility in the near term, prompting us to revise higher our second-quarter forecasts. However, we believe prices for aluminum and nickel risk a pullback once the market adapts to the new changes and realizes the sanctions do not change the overall supply picture.”

ANZ Research’s Daniel Hynes and Soni Kumari did not expect the sanction to impact the nickel price in the medium term, given that the market has been facing oversupply for three consecutive years.

In addition, Russian nickel might still find a way to reach the market, with Russian traders offering discounts to physical traders, Robert Montefusco, Sucden Financial’s Industrial Commodities analyst, said in the webinar.

Clean Energy Technologies to Support Demand

In recent years, the push for energy transition from fossil fuels to renewable sources has led to an increased demand for lithium, cobalt, and nickel.

These three metals are essential raw materials for EV batteries and other energy storage cells used for storing energy generated from intermittent wind or solar power.

The Australian Government’s Office of Chief Economist (OCE) forecasts global nickel demand to grow by 5.8% annually from 2024 to 2029, with clean energy technologies as the primary driver.

OCE projected clean energy technologies, including EVs and low-emission power generation, such as wind, hydro, and geothermal, could account for 50% of total nickel demand by 2029.

In EV batteries, nickel is facing increasing competition from alternative battery chemistries, particularly from lithium iron phosphate (LFP) batteries, which are predominantly made in China.

According to the International Energy Agency (IEA), the share of nickel-cobalt-manganese (NMC) battery chemistries in global battery output fell to 54% in 2023 from 61% in 2021.

Another commonly used battery chemistry, nickel-cobalt-aluminium (NCA), also dropped to 6% in 2023 from 11% in 2022. In comparison, the share of LFP usage surged to 40% in 2023 from 28% in 2022.

Share of Battery Capacity of Electric Vehicle Sales by Chemistry and Region, 2021-2023

Share of Battery Capacity of Electric Vehicle Sales by Chemistry and Region, 2021-2023
Sources IEA analysis based on data from EV Volumes and China Automotive Battery Industry Innovation Alliance.

NCM can store more energy in a smaller package or with a higher energy density, enabling EVs to travel longer distances before needing to be charged and offering better acceleration performance than LFP.

Both NCM and LFP use expensive lithium to make battery cathodes, but iron and phosphate are widely available and cheaper than nickel, which has limited availability.

Cheaper raw materials could reduce battery costs, accounting for up to 40% of an electric car’s value. Consequently, this could lower the price of EVs, making them more affordable for the masses.

According to the International Energy Agency (IEA), NMC batteries were less than 25% more expensive than LFP equivalents in 2023, down from a premium of 50% in 2021.

Furthermore, cobalt faces ethical issues as it is often linked to human rights abuses in Congo, the world’s largest cobalt producer.

More Output Cut to Respond to Low Price

While oversupply is expected to persist in the medium term, analysts anticipate that producers may begin reducing their output in response to low prices.

According to Sucden Financial’s Q2 Metal Report, nearly half of global nickel operations have become unprofitable, with prices hovering from $16,000 to $17,000/ton.

It is estimated that 5-7% of global annual production has been halted so far, as the low price led to shutdowns in Australia and New Caledonia.

In September 2023, Glencore decided to stop funding the company’s loss-making nickel assets in New Caledonia, Koniambo Nickel, Reuters reported.

Australian private nickel miner Wyloo Metals put its Kambalda nickel mines on maintenance due to sharp drop in nickel prices, ABC News reported on 24 January.

ANZ Research’s Hynes and Kumari wrote in a nickel price forecast note on March 28 that continued weakness in the London Metal Exchange (LME) nickel price could see further cuts to supply.

They added that a shutdown of nickel operations in New Caledonia and Australia could take out more than 50 kt.

“This could bring back the surplus in that market to a more reasonable level,” they said.

Nickel Price Forecast 2024

Analyst/Source Nickel Price Forecast 2024 (per ton)
ANZ Research $17,150
Australia’s OCE $16,954
BMI $17,000
Fitch Ratings $17,000
ING $17,535
The World Bank $17,000
Trading Economics Q2: $19,195

Q3: $18,747

Q4: $18,310

Most nickel price forecasts gathered by Techopedia expected the metal’s price to fall this year compared to 2023, weighed down by continued excess supply.

Daria Efanova of Sucden Financial suggested that nickel prices may not trade higher than $17,000 to $18,500/ton. A higher price could provide a profit margin for Indonesian miners and smelters to produce more than other producers.

Efanova said:

“While we don’t expect $16,000 to break again because of the cost of production levels, it’s really hard for us to see a break above $19,000 per ton again, purely from the fundamental perspective.”

ANZ Research estimated nickel prices to reach $17,150/ton in 2024, dropping from $21,148/ton in 2023. However, the bank has revised its nickel price forecast 2024, up from $13,325 in March.

Australia’s OCE’s nickel price forecast 2024 saw the metal drop to $16,954 this year from $21,950 in 2023.

OCE wrote:

“With solid growth in mined and refined supply projected to continue over the outlook period, and slowing demand from key sectors in the near term, the resulting oversupply is forecast to contain nickel prices in 2024.”

Fitch Solutions’s BMI estimated the nickel price to trade at an average of $18,000/ton in 2024, down from $21,688 in 2023.

Fitch Ratings has revised downward its nickel price forecast for 2024 to $17,000 from $18,000 to reflect an oversupplied market.

Dutch lender ING and the World Bank expected nickel prices to trade at around $17,535/ton and $17,000 in 2024, respectively. According to the World Bank, the nickel price averaged $21,521/ton in 2023.

At the time of writing on 20 May, Trading Economics estimated nickel to trade at an average of $19,195 in 2Q 2024 and gradually drop to $18,310 by the final quarter of this year.

Nickel Price Forecast 2025

Analyst/source Nickel Price Forecast 2025 (per ton)
ANZ Research $17,720
Australia’s OCE $17,321
BMI $18,500
Fitch Ratings $16,000
ING $18,100
The World Bank $18,000
Trading Economics Q1: $17,320

Most analysts project that the nickel price will rebound moderately in 2025, based on solid demand growth from stainless steel, EVs, and energy transition.

ANZ Research’s nickel price forecast for 2025 saw the price reach $17,720/ton, up 3.3% from an estimated $17,150 in 2024. Australia’s OCE expected nickel to trade at around $17,321/ton in 2025, up 2.1% from a forecast of $16,954 for 2024.

Nickel price predictions provided by BMI, the World Bank, and ING projected the nickel price to trade higher at around $18,000/ton level.

On the other hand, Fitch Ratings and Trading Economics expected the downtrend in nickel prices to continue in 2025.

In its latest metal price assumptions in March, Fitch Ratings has also cut its nickel price forecast for 2025 to $16,000 from previous projection of $17,000/ton as excess supply in market lingers.

Trading Economics also estimated that the nickel price could slide further to 17,884 in Q1 2025 from $18,310 in Q4 2024.

Nickel Price Forecast 2030

Analyst/source Nickel Price Forecast 2026-2030 (per ton)
Australia’s OCE 2026: $17,652

2027: $18,426

2028: $18,940

2029: $19,312

Fitch Ratings 2026: $15,000

2027: $15,000

ING 2026: $18,250

Long-term nickel price forecasts for 2030 are divided due to multiple factors.

Australia’s Office of the Chief Economist (OCE) projected a gradual upward trend in nickel prices from 2026 to 2029. The office anticipates the metal to trade at $19,312 per ton in 2029, up from $17,652, as continued growth in clean energy applications is expected to lead to a more balanced market.

ING Bank projected the nickel price to climb to $18,250 in 2026, up from $18,100 in 2025. It does not provide nickel predictions for 2027 to 2030.

Meanwhile, Fitch Ratings expected the nickel price to steady at $15,000 in 2026 and 2027. The rating agency attributed its nickel price forecast to two factors.

First, technological advancements have allowed Class 2 nickel (with a nickel content of less than 99.8%), mainly used to make stainless steel from countries such as Indonesia, to be turned into Class 1 nickel, used to make batteries.

Fitch Ratings said to Techopedia by email:

“Since last year the LME has begun accepting converted products from mainly Chinese producers into its warehouses, fundamentally loosening the refined nickel market that underpins LME nickel reference pricing.”

Furthermore, persistent oversupply will likely continue for the next few years due to rising output from Indonesia.

Fitch Ratings said:

“Given the above as well as the lower cost base for its producers (which mainly use coal-fired energy), Indonesian capacity additions in intermediate and converted nickel products have been ramping up and are expected to keep the refined nickel market in persistent oversupply over the next few years, offsetting strong expected global demand growth from batteries.”

The Bottom Line

A rebound in nickel prices may not happen this year due to sustained oversupply in the market. However, some forecasts are optimistic that the oversupply will eventually dissipate as low prices could compel miners to scale back output.

Simultaneously, solid demand for energy storage from intermittent renewable energy sources and for EV batteries could support prices.

Do your own research and always remember your investment decision depends on your attitude to risk, your expertise in the commodities market, the spread of your portfolio, and how comfortable you feel about losing money.

The information in this article does not constitute investment advice and is meant for informational purposes only.

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Fitri Wulandari
Financial Journalist
Fitri Wulandari
Financial Journalist

Fitri has over 20 years of experience in financial journalism. She has contributed to various international media outlets, including Dow Jones Newswires, Bloomberg, and Reuters, before joining Techopedia. She spent the first 15 years of her career covering commodity and energy news, later transitioning to general financial writing. These days, she conducts interviews with industry players and analysts and reports on international conferences. Fitri holds a degree in International Relations, supporting her expertise in financial journalism. She occasionally serves as a guest trainer for journalistic training and as a moderator for panel discussions.