TRADE REVIEW: Asian nickel market faces supply surplus, Q2 demand recovery uncertain

This report is part of the S&P Global Commodity Insights' Metals Trade Review series, where we dig through datasets and digest some of the key trends in iron ore, metallurgical coal, copper, alumina, cobalt, lithium, nickel and steel and scrap. We also explore what the next few months could bring, from supply and demand shifts to new arbitrages, and to quality spread fluctuations.

The Asian nickel market may remain under pressure in the coming months due to a supply surplus driven by increased Indonesian production levels and weak demand from major nickel-consuming sectors, including stainless steel and electric vehicles, amid rising uncertainty from tariff-led global trade tensions.

"Amid an unstable global macroeconomic backdrop, we expect the global primary nickel market to remain oversupplied in 2025, with production from Indonesia forecast to expand further this year, despite challenges like tight nickel ore availability and a potential royalty rate hike on nickel products by the government," Jason Sappor, metals and mining research senior analyst at S&P Global Commodity Insights, said.

Battery technology shifts

Despite the growth in EV sales spurred by China's extended trade-in subsidies and Europe's stricter 2025 carbon emissions regulations, the battery sector saw a shift in preferences from nickel-rich nickel-manganese-cobalt (NMC) batteries toward nickel-free lithium-iron-phosphate (LFP) batteries, driven by price competitiveness.

China, the world's largest battery-producing country, saw a further decline in its NMC battery production share in the first two months of 2025, data from China Automotive Battery Innovation Alliance showed. NMC batteries shrank to 19% of the total 107.8GWh and 100.3GWh production volumes in January and February, respectively.

Weak demand weighs on nickel sulfate

The battery sector contributed to about 384,000 mt Ni, 11.5% of the global primary nickel consumption in 2024, according to Commodity Insights. Although it is expected to increase to 543,000 mt Ni, making up 15.2% of 2025's global consumption, nickel sulfate prices are likely to remain weak due to underutilized mixed hydroxide precipitate-to-sulfate capacity.

China's CNGR announced that it would pause investment in the South Korean nickel smelting project. Chinese nickel sulfate prices were rangebound throughout Q1, fluctuating between Yuan 25,200-27,700/mton slower demand and shifting battery preferences. Prices rose in March, supported by high production costs and higher MHP feedstock payables.

Platts, part of Commodity Insights, assessed spot battery-grade nickel sulfate with a minimum 22% nickel content and maximum 100 ppb magnetic material at Yuan 27,100/mt ($3,759/mt) DDP China April 11, up 7.5% since the start of Q1.

MHP payables continued to rise throughout Q1 on tighter supply. Nickel and cobalt-containing MHP saw increased demand amid a four-month export ban of cobalt from the Democratic Republic of Congo, further tightening supply despite increased capacity and production from Indonesia.

As the largest MHP supplier to China, Indonesia's MHP exports to China rose 72.3% year over year to 258,709 mt in January-February, 92.1% of China's total imports, Chinese customs data showed.

Platts assessed the MHP CIF North Asia basis LME nickel price at 84% payables April 11, up 4% since Jan. 2.

The all-in price, as calculated from the payables basis of the LME nickel price, was at $13,481/mt, up $1,108 since the start of Q1.

MHP supply is expected to remain tight in Q2 as two nickel matte producers have shifted their output to nickel pig iron, or NPI, while new MHP projects have yet to be launched, sources said.

NPI market exhibits resilience

NPI prices throughout the first half of Q1 were supported by the high cost of production, a smaller-than-expected supply surplus and a temporary demand uptick from the stainless steel industry despite overall sluggishness in the wider nickel industry. NPI with 10% nickel content rose 7% to $12/mtu on March 28 from $114.5/mtu FOB Indonesia beginning of Q1, Platts data showed.

Proposed Indonesian nickel royalty changes lift prices

Indonesia's Ministry of Energy and Mineral Resources proposed to increase royalty rates and non-tax state revenues for mineral and coal commodities at a public consultation March 8, which will take effect in April in an announcement a month later.

Higher royalties were proposed for nickel ore from 14% to 19% alongside other nickel products like nickel matte, NPI and ferronickel. Toward the end of Q1, market expectations were adjusted for potential cost increases.

Upstream, nickel ore prices rose throughout Q1, with limited gains expected in Q2. As the Philippines' rainy season ends, more shipments are expected to reach China, and improved NPI margins have sparked buying interest in China.

However, NPI prices might struggle to maintain gains in Q2 on slow prevailing stainless steel demand.

Indonesian nickel ore premiums remain a key focus, as these fluctuations could affect Philippine nickel ore export prices and China's overall nickel supply chain.

Platts assessed daily spot NPI with 10% nickel content at $117.5/mtu FOB Indonesia April 11, up 2.5% since the start of Q1.

Low-grade nickel ore prices rose 28% in Q1 to the highest at $44/wmt March 26, while high-grade nickel ore prices also rose 14% to the highest at $66.2/wmt March 26.

Platts assessed low-grade nickel ore with 1.3% nickel content at $43.3/wmt CIF China and high-grade nickel ore with 1.6% nickel content at $65.5/wmt CIF China April 11, up 26% and 12.9%, respectively, from the start of Q1.

Tariff-led trade tensions prompt uncertainty

US President Donald Trump's tariffs on automotive imports and Chinese industrial metals might add to further demand uncertainty in the near term. These tariffs are expected to increase US production costs for batteries and stainless steel, which could worsen nickel demand.

"A slowdown in global economic activity would dent global primary nickel demand in a market already grappling with oversupply," said Sappor, adding that "further evolutions in the Trump administration's trade tariff policies, we expect nickel prices to remain volatile in the near term."