Understanding Nickel Markets: Where 2026 Nickel Price Forecasts Are Headed

The outlook for nickel prices in 2026 presents a complex puzzle for investors and producers alike. After spending much of 2025 trading in the US$14,000-15,000 per metric ton range, the precious metal faces a challenging year ahead shaped by structural imbalances and shifting market dynamics.

The Persistent Supply Challenge: Why Indonesian Production Remains the Wild Card

Indonesia’s dominance in global nickel production continues to reshape market fundamentals. The nation controls roughly 30% of the world’s nickel output, a position that has only strengthened over the past several years. Production figures tell the story: while Indonesia produced just 800,000 MT in 2019, output surged to 2.2 million MT by 2024 — a remarkable expansion that has flooded global markets.

The February 2025 quota adjustment exemplifies this trend. When the Indonesian government increased its allowable nickel ore extraction to 298.5 million wet metric tons (up from 271 million WMT in 2024), it signaled continued commitment to ramping up production despite mounting concerns about market saturation. This policy shift drove exchange inventories higher throughout the year. At the London Metal Exchange, stockpiles climbed to 254,364 MT by year-end 2025, compared with 164,028 MT at the start of the year — a 55% surge that underscored the growing glut.

However, recent price weakness has injected uncertainty into this narrative. When nickel fell to US$14,295 in late 2025, it approached the profitability threshold for Indonesia’s lower-cost mining operations. Faced with this squeeze, discussions have emerged around production restraint. According to Shanghai Metal Market reporting, Indonesian officials have proposed reducing ore output to approximately 250 million MT in 2026, representing a material step down from the 379 million WMT target set for 2025.

Yet such cuts remain far from certain. Ewa Manthey, commodities strategist at ING, suggests that Indonesia may defer production reductions for now, preferring to monitor how recently implemented policies take effect. Two policy shifts merit attention. First, in April 2025, the government shifted from a flat 10% royalty structure to a dynamic sliding scale of 14-18% tied to nickel prices — effectively giving the state higher revenue at elevated price levels. Second, mining license validity periods were cut from three years to one year in October, tightening government control over production decisions.

“The global market is still forecast to remain in surplus — around 261,000 MT in 2026 — so further cuts would need to be significant to alter fundamentals,” Manthey explained. This means that meaningful price recovery would require coordinated international action, not unilateral Indonesian restraint.

Demand Headwinds: Stainless Steel Stagnation and the EV Battery Shift

While supply abundance poses one challenge, demand weakness compounds the pressure on nickel prices. The metal’s primary application is stainless steel production, and here the picture is particularly grim. A significant portion of global stainless steel demand originates from China’s construction sector, where the housing market has yet to recover from its 2020 structural collapse.

Despite government stabilization efforts throughout 2024 and early 2025, the trend has worsened rather than improved. November sales in China fell 36% year-on-year, with cumulative declines of 19% through the first eleven months of 2025. Given that stainless steel consumption accounts for over 60% of global nickel demand, this stagnation has profound implications for metal prices.

“China’s property sector weakness has weighed on stainless steel demand, which accounts for over 60 percent of global nickel consumption. Even with broader economic growth, this stagnation has kept nickel prices subdued,” Manthey noted. A genuine recovery in Chinese real estate would provide support, but surplus dynamics would likely cap any sustained rally.

Adding another layer of complexity is the ongoing transformation in EV battery chemistry. Much of the nickel production expansion over the past five years was predicated on rising battery demand for electric vehicles. However, leading manufacturers like Contemporary Amperex Technology have increasingly shifted toward lithium-iron-phosphate (LFP) chemistry.

Historically, nickel-manganese-cobalt batteries were considered technically superior due to higher energy density and superior range. But recent breakthroughs have narrowed this advantage considerably. Modern LFP batteries now achieve ranges exceeding 750 kilometers, while offering meaningful cost reductions and enhanced safety profiles. September data shows nickel battery demand rising just 1% year-on-year, while LFP demand climbed 7% during the same period.

This trend has been exacerbated by policy reversals in key markets. The elimination of the US EV tax credit in September cratered American demand after consumers rushed to capture the US$7,500 incentive before expiration. Cox Automotive data shows Q4 2025 EV sales plunged 46% from Q3, and 37% from the same quarter in 2024 — a stunning reversal after reaching 1.2 million units through the first nine months of the year. Meanwhile, Ford Motor’s decision to scale back EV ambitions, accompanied by a US$19.5 billion writedown, signals weakening manufacturer confidence. The EU’s mid-December withdrawal from its 2035 internal combustion engine phase-out further dampened sentiment for battery metals broadly.

Nickel Price Forecast 2026: Navigating Headwinds Without Relief

Setting expectations for nickel prices through 2026 requires reconciling these competing forces. According to ING analysis, prices will likely remain constrained throughout the year. The base case suggests prices will struggle to maintain levels above US$16,000 per ton given the structural surplus.

“We expect prices to struggle to hold above US$16,000 given the surplus. Upside risks hinge on unexpected supply disruptions or stronger-than-forecast stainless and battery demand, but sustained levels above US$19,000 look unlikely under current fundamentals. We see prices averaging US$15,250 in 2026,” Manthey explained.

This outlook aligns closely with World Bank forecasting, which projects US$15,500 for 2026, potentially rising modestly to US$16,000 in 2027. Russia’s Nornickel, among the world’s largest producers, similarly anticipated a refined nickel surplus of 275,000 MT in 2026, reinforcing the bearish tone. For price recovery to materialize at levels above US$19,000 — the range that would justify western producer investment — cuts of several hundred thousand metric tons would be needed. Even aggressive supply reductions would likely require demonstrated pricing discipline that today seems improbable.

The challenge facing nickel markets appears structural rather than cyclical. Until Chinese real estate stabilizes, EV demand policies stabilize, and Indonesian supply truly contracts, nickel prices are likely to remain range-bound in the US$14,000-16,000 band. Investors holding out for a robust recovery may need to extend their timeframe considerably, as the confluence of supply, demand, and policy headwinds suggests a prolonged period of price pressure ahead.