Global Nickel Market Trends, Risks, and Future Prospects

Global Nickel Market Trends, Risks, and Future Prospects

At the 2025 Lithium Battery Raw Materials Conference hosted by china Lithium Products CLPC , Peter lee , the head of nickel industry research at SMM, shared on the topic of "The Continuously Developing Nickel Industry: Trends, Risks, and Future Path".

He stated that SMM expects the global primary nickel market to maintain an oversupply situation from 2025 to 2030. However, in the short term, the significant increase in MHP coefficient provides strong cost support for refining nickel; At the same time, Indonesia still maintains strict control over nickel resources, and recently smelting companies have been stockpiling in advance due to concerns about the shortage of ore resources. Under the combined effect of these factors, although the fundamentals of refined nickel show oversupply, the space for its price decline is relatively limited in the short term.

Indonesian laterite nickel ore dominates the supply, while the global supply of sulfide nickel ore continues to decline

From 2018 to 2030 (expected), the structure of global nickel ore production is undergoing a fundamental transformation:

It is expected that the share of nickel sulfide ore will decrease from 32% in 2018 to 12% in 2030, while the share of laterite nickel ore will significantly increase from 68% to 88%, becoming the main source of nickel ore. But starting from 2023, competition among laterite nickel ores is gradually beginning. By 2023, the proportion of pyrometallurgical ores will be 70%, while the proportion of hydrometallurgical ores will be only 10%. It is expected that by 2030, the proportion of pyrometallurgical ores will decrease to 61%, while the proportion of hydrometallurgical ores will increase to 27%.

The increase in the proportion of wet smelting is mainly due to the gradual depletion of high-grade nickel ore resources worldwide, and the industry's inevitable choice to develop low-grade laterite nickel ore with huge reserves. At the same time, the wet process, with its comprehensive advantages in production cost, comprehensive recycling, environmental protection and low-carbon, perfectly meets the industry's demand for low-cost, large-scale, and green nickel raw materials.

Looking at nickel ore supply by country, Indonesia's share has skyrocketed from about 26% in 2018 to nearly 80% in 2030, while the Philippines' share has decreased from about 41% to about 8%. Indonesia holds an absolute dominant position in the global nickel resource supply chain.

Indonesia leads new nickel intermediate project - cost advantage drives MHP market share increase

Indonesia has become an absolute growth point for global nickel intermediates, especially MHP. Its cost advantage is squeezing the market space for high cost intermediate products such as high ice nickel in other regions and high cost processes. Indonesia's MHP supply has surged from only 208000 nickel tons in 2021 to an estimated 1.353 million nickel tons by 2030, and its global share has also skyrocketed from 6% in 2021 to an estimated 86% by 2030.

Compared to the surge in MHP, the growth of high nickel supply in Indonesia appears particularly flat. From 2021 to 2030, the supply of nickel matte is expected to increase from only about 68000 nickel tons to around 312000 nickel tons, with a growth rate much lower than MHP. Mainly due to its relatively high smelting cost and relatively more concentrated downstream, with limited application areas.

Long term outlook for primary nickel supply: nickel pig iron still dominates, growth of nickel sulfate is expected to slow down, and refined nickel share remains stable

(1) NPI: Cost Advantage Driven Industrial Revolution

As one of the sources of nickel raw materials for stainless steel plants, NPI accounted for about 40% of nickel raw materials in 2018, when its economy was relatively small compared to refined nickel. With the economic reversal of NPI over nickel, downstream stainless steel smelting enterprises are gradually using NPI as the main source of nickel raw materials, and its proportion will increase to 70% by 2024. The current NPI price has fallen to a historical low, and most smelters are facing sustained profit inversion. With cost support, NPI prices are prone to rise but difficult to fall.

(2) Refined nickel: building a moat with unique 'financial attributes'

Refined nickel, as a "standard product", has a wide range of downstream applications. It is not only one of the raw materials for producing nickel sulfate, but also used for high-end stainless steel, special alloys, and electroplating. Simultaneously refining nickel can be delivered on LME and SHFE, which supports the rigidity of its production and demand, freeing it from the volatility of being purely an industrial metal. In the medium to long term, using low-cost MHP as raw material to produce refined nickel will further enhance its economy and promote production growth.

In the coming years, global nickel consumption will still be driven by the development of stainless steel and new energy batteries, but the historic high growth rate is difficult to sustain

(1) 2015-2020: Absolute dominance period of stainless steel

In 2015, stainless steel consumed nearly 70% of primary nickel, while batteries accounted for only 2%. At this time, the new energy market is still in its infancy and the total demand for nickel is relatively small.

(2) 2020-2025E: Explosive Growth Period of Battery Demand

The new energy market represented by China has entered a high-speed growth channel, and the demand for ternary batteries has exceeded 10%. During this period, batteries were the main contributor to the increase in demand, but the share of stainless steel remained as high as 68%.

(3) 2025E-2030E: Battery growth slows down, stainless steel maintains stability

In terms of power batteries, the ternary battery market continues to be squeezed by lithium iron phosphate batteries, resulting in a decrease in its own growth rate. Before the large-scale commercialization of solid-state batteries in the next generation of technology, the demand growth space for nickel in batteries is limited. The global demand for stainless steel is expected to maintain moderate growth, and due to its huge size, it will still account for around 70% of the demand for primary nickel.

nickel ore

Indonesia has the world's largest share of nickel resources and is expected to account for approximately 40% of the world's total by 2025

Three measures of quantity, price, and royalties are jointly implemented to increase the Indonesian government's tax revenue

Starting from 2024, the export of nickel ore from the Philippines to Indonesia is rapidly increasing

SMM expects that the total amount of nickel ore imported by Indonesia from the Philippines in 2025 may increase significantly compared to 2024.

In terms of nickel ore exports from the Philippines, the amount of nickel ore exported to Indonesia will rapidly increase in 2024, accounting for about 19%. From January to August 2025, the proportion of nickel ore exported from the Philippines to Indonesia has expanded to around 22%.

The supply and demand situation varies among different islands, with Sulawesi Island being the largest source of ore

intermediate goods

The new intermediate goods projects are mainly concentrated in Indonesia, and it is expected that Indonesia's total production will account for 84% by 2030

According to SMM, the new intermediate goods projects are mainly concentrated in Indonesia. SMM expects that from 2025 to 2030, Indonesia's intermediate goods production will continue to increase in proportion to the global total. It is expected that by 2030, Indonesia's intermediate goods production will account for about 84% of the global total; The continuous increase in MHP production in Indonesia has brought about the most significant growth rate, and it is expected that the total production of MHP in Indonesia will reach around 86% by 2030; The market share of high nickel production in Indonesia is expected to increase to around 80% by 2030.

The global demand for MHP is strong, and MHP produced in Indonesia is mainly used for export

SMM expects that from 2025 to 2029, the production capacity and output of MHP in Indonesia are expected to increase year by year, but the growth rate may slow down. The MHP produced in Indonesia is mainly used for export.

Affected by the surge in demand for new energy, high ice nickel production capacity will continue to expand until 2024. Affected by MHP's new production capacity, the growth rate of high ice nickel will slow down after 2024

Primary nickel

Global Market Forecast and Distribution of Nickel Pig Iron and Water Quenched Nickel Supply

According to SMM analysis, in 2018, as one of the sources of stainless steel raw materials, the use of nickel pig iron accounted for about 40%, and its economic advantage is relatively small compared to refined nickel. After 2018, as the economy of nickel pig iron surpassed refined nickel, downstream stainless steel enterprises gradually adopted nickel pig iron as the main raw material, and its usage proportion increased from 40% to 70% by 2024.

Since 2020, due to economic factors, the nickel pig iron industry has shifted from China to Indonesia, resulting in a continuous decline in the market share of nickel pig iron in China. In addition, due to the explosive expansion of production capacity, nickel pig iron has entered a surplus stage since 2022.

The downstream of water quenched nickel mainly includes stainless steel, some alloys, and the casting industry. Its proportion in stainless steel was first replaced by refined nickel, and then by nickel pig iron. The expected increment of major producing countries in the future is relatively low, and the supply side will remain relatively stable with little change.

Review and Prospect of Global Nickel Sulfate Market

Between 2025 and 2030, SMM expects that from a supply perspective, the supply of nickel sulfate is expected to grow at a rate of approximately 2.56% per year, mainly due to the increase in MHP supply and the launch of new nickel sulfate projects. However, on the demand side, the compound annual growth rate may show a negative value, approximately -0.25%. The reasons behind this trend include the squeezing of market share of ternary batteries by lithium iron phosphate batteries, and the reduction of export orders due to the transfer of domestic production capacity to overseas markets. But with the development of solid-state battery technology and the expansion of its production capacity, future market demand is expected to gradually recover.

Regarding the overseas market, it is expected that the supply of overseas nickel sulfate will decrease by about 20.6% compared to the previous year in 2025, mainly due to a shortage of raw materials. At the same time, due to the new energy subsidy policy stimulating market demand, it is expected that the demand for this year will increase by approximately 19.21% year-on-year.

From 2025 to 2030, SMM predicts that the supply of overseas nickel sulfate will gradually increase at a compound annual growth rate of about 4%, thanks to the rising cost of raw materials and the trend of localized production promoting supply growth. During the same period, influenced by the localization of industries and the expansion of solid-state battery technology, the demand for nickel sulfate overseas is expected to increase at a compound annual growth rate of approximately 4.55%.

Global refined nickel market production forecast and distribution

In terms of production, SMM predicts that from 2018 to 2021, the global refined nickel market production will be in a stable development stage; 2021-2025E: The global refined nickel market production may be in a rapid growth stage; 2025E-2030E: Global refined nickel market production growth rate may slow down.

The subsequent new refined nickel projects are mainly electro deposited nickel, mainly in China and Indonesia.

downstream

Battery demand dynamics: NCM market share declines, high nickel will become mainstream

Looking ahead to the future demand trend of the battery market, SMM predicts that the demand for lithium iron phosphate batteries will continue to grow, while the market share of ternary lithium batteries will relatively decrease. In the production of positive electrode materials for ternary batteries, it is expected that batteries with medium to high nickel content will become the mainstream choice.

Global stainless steel production forecast

SMM predicts that the total production of stainless steel in China is expected to maintain a year-on-year upward trend until 2030, with the 300 series stainless steel experiencing the most significant increase. From a regional perspective, China contributes the majority of global stainless steel production.

The growth rate of the alloy and electroplating market will slow down in the future

Alloy and special steel: consume 80% of refined nickel usage. Driven by the demand for jet engines and gas turbines, the demand has increased from 39.1 tons in 2018 to 528000 tons in 2025 (with a compound annual growth rate of 4%).

Electroplating: The market share of demand is relatively small, and it will remain stable at around 104000 tons from 2018 to 2025. Driven by the demand for electric vehicles and precision electronics, it is expected that the demand will reach 112000 tons by 2030.

Long term and short-term price logic

The logical anchor point at the bottom of the nickel price in London - delivery pressure, cost substitution, and process competition

The price trends of refined nickel and nickel pig iron are intertwined: raw material competition will emerge again

Global primary nickel is expected to remain in surplus

SMM has compiled a review and forecast of the expected global surplus of primary nickel from 2015 to 2030, and predicts that the global primary nickel market may continue to maintain a situation of oversupply in the future.

There are significant differences in gross profit margins among various industry sectors, with profits mainly concentrated in upstream links

After comparing the current gross profit margin of the global nickel industry, SMM found that there are significant differences in gross profit margins among various industry sectors, with profits mainly concentrated in the upstream sector. The profit margin of the nickel ore end sector remains above 20%, and the profit margin of humus can even exceed 40%; In the downstream stainless steel sector, the profit margin remains below 10%.

Tracking the inventory index of various links in the SMM nickel industry chain to track short-term market trends can help determine short-term market trends

Why is there a continuous surplus of refined nickel and limited price decline?

I. Fundamental perspective

Since the end of 2024, the production of high ice has decreased, and the market share of MHP has further increased.

2. There will be no new MHP projects put into operation in the short term.

3. The policies of the Democratic Republic of Congo have led to a tight supply of cobalt, pushing up the value of cobalt in MHP and triggering speculative MHP stockpiling behavior. These three factors further exacerbate the tight supply situation of MHP.

Therefore, the MHP coefficient has significantly increased in the short term. Under cost support, the price decline of refined nickel is limited.

II. Macro level

As a metal with financial properties, the price of refined nickel is not solely determined by fundamentals. Against the backdrop of loose monetary policy, the decline in refined nickel prices has slowed down.

III. Other perspectives

In terms of market sentiment, Indonesia's nickel mining policy is still relatively tight. Smelters are concerned about ore shortages and have started to prepare inventory in advance, which has also boosted market optimism.

Why does MHP not flow more to nickel sulfate plants when nickel sulfate is tight and there is an excess of refined nickel?

The ternary precursor factory has signed a low coefficient agreement with downstream customers, making it difficult to achieve profitability and share profits with the nickel sulfate factory. The profit level of the refined nickel plant that purchases MHP externally is better than that of the nickel sulfate plant that purchases raw materials externally. Therefore, more MHP has flowed into the refined nickel field with larger supply.

What aspects should be paid attention to when switching between short-term and medium-term price changes?

The fundamental aspect needs to pay attention to changes in the market's available MHP volume