Nickel prices have dropped to near five-year lows and prospects for the metal are bearish for 2025 because of a supply glut and concerns over trade war, analysts have said.
“In terms of price, nickel was the weakest performing base metal in 2024, with the annual average LME price falling 22 per cent year-on-year (y-o-y) to $16,812 a tonne… Nickel prices will remain low on global oversupply,” said the Australian Office of the Chief Economist (AOCE).
“We anticipate that the market will remain in surplus in 2025, buoyed by resilient Indonesian production growth,” said research agency BMI, a unit of Fitch Solutions.
“We believe this underperformance (of nickel) is likely to continue —at least in the near term —amid weakening demand and a sustained market surplus,” said ING Think, the financial and economic analysis wing of Dutch multinational financial services firm ING.
Down 3% since Jan 1
Currently, nickel is quoted at $14,030 a tonne for the three-month contract on the London Metal Exchange (LME). Spot nickel is ruling at $13,800. Prices are at their lowest since September 2020. They have declined over 3 per cent since January 1.
The Trading Economics website said rising nickel stockpiles on the LME are adding to the pressure, with Chinese-processed Indonesian nickel now accounting for over 50 per cent of LME inventories, up from just 11 per cent at the start of 2024.
“Indonesia’s surging refined metal output is further saturating the market, squeezing margins even for domestic producers,” it said.
BMI said it has lowered its nickel price forecast for 2025 from an annual average of $17,000/tonne to $15,000. “We expect the average annual price of nickel to decrease for the third consecutive year in 2025, with an anticipated decline of 12.0 per cent, following decreases of 15.3 per cent in 2023 and 21.4 per cent in 2024,” it said.
Continuous supply growth
The AOCE said that so far in 2025, the benchmark nickel price has remained about $16,000 a tonne. Persistent growth in global refined nickel supply is expected to contain prices around $17,000 a tonne (in real terms) for the next few years.
“With solid growth in capacity projected for both mine and refined global supply this year, the average price is expected to average around $16,000 a tonne in 2025,” it said.
However, easing supply growth toward the end of the outlook from major producers (like Indonesia) is expected to help reduce the current global surplus, and see prices recover to an average of $18,000 by 2030, the Australian Chief Economist Office said.
BMI said the escalation of risks associated with Trump’s trade policies is poised to further exacerbate downward pressures on nickel prices. “The newly-imposed tariff includes most nickel products, presenting significant demand-side risks. We anticipate volatility ahead as market players respond to the ongoing stream of trade-related developments,” it said.
Supply cut to accelerate
“... the profitability of downstream processing and refining remains a key risk to the continued expansion in global supply in 2025 and further into the outlook period. PT Gunbusterone of Indonesia’s largest nickel smelters, was reported to have cut production in early 2025 due to low prices and tight supply of mined ore,” the AOCE said.
Further cuts to supply would be expected to accelerate the reduction in the global oversupply projected for later in the outlook period.
However, BMI said a flurry of potential supply-side challenges in Indonesia has further fuelled optimism. “Although we maintain our bearish outlook for 2025 nickel prices, tighter market conditions are expected to place a floor under prices in 2025. We expect the nickel market to stay in surplus in 2025, with a balance of approximately 164,000 tonnes, though it will be tighter than the 226,000 tonnes surplus seen in 2024, driven by the closure of high-cost operations outside Indonesia and strong demand,” it said.
However, Indonesian production growth will continue, driving prices lower. “We expect global refined nickel production will increase in 2025 (4.9 per cent to 4.2 million tonnes (mt)), albeit at a more moderate pace relative to 2024 levels (5.5 per cent to 4 mt ),” said the research agency.
3 upside risks
Indonesian production growth will be the main driver of production growth amid the ramp-up of new projects, with output set to increase by 9 per cent y-o-y to 1.8 mt in 2025. “At the same time, an increase in Class 1 nickel production capacity in China is set to further support global growth,” it said.
BMI flagged uncertainty over Indonesia’s nickel mining quota plans, a hike in Indonesia nickel ore royalty rates from the current 10 per cent and the Philippines’ move to ban nickel ore exports as three upside risks.
The AOCE said World nickel demand is projected to see steady growth over the outlook period to 208, with EV batteries representing an increasing share of global end-use demand.