The nickel market, heavily dependent on demand for stainless steel as well as lithium-ion batters in electric vehicles, is challenging to forecast.
If anything, the EV sector has proven to be quite volatile as evidenced by stock prices of companies in the broader EV space.
After the big ‘pump’ in 2022 in the price of nickel, driven by an exceptional geopolitical event (Russia/Ukraine), the price of nickel came down, and stayed then.
Despite the challenges that come with predicting the nickel price, we will outline nickel price catalysts and expected trends for 2025 as key inputs into the future path of nickel.
Nickel price correlation
Nickel prices exhibit a strong correlation with demand from 2 sectors: EV and stainless steel.
Lithium-ion batteries: Nickel is a crucial component in the production of batteries for electric vehicles (EVs) and other energy storage solutions. Nickel is used in the cathodes of lithium-ion batteries, particularly in high-nickel chemistries like nickel-cobalt-manganese (NCM) and nickel-cobalt-aluminum (NCA), which are known for their higher energy densities, making them ideal for EVs.
These battery types are favored for their ability to deliver extended range and performance, making them integral to the EV market. As the adoption of EVs increases, the demand for nickel in battery production rises correspondingly, thereby influencing nickel prices. EV Magazine
Stainless steel: Additionally, nickel prices are closely linked to the stainless steel industry, which is a major consumer of nickel. Nickel is used to enhance the strength, corrosion resistance, and formability of stainless steel, which is widely used in construction, automotive, aerospace, and household products.
Fluctuations in stainless steel production and demand can significantly impact nickel prices. SFA Oxford
Nickel supply forecast for 2025
In 2025, global nickel supply is projected to reach approximately 3.65 million metric tons, reflecting a 7.4% increase from the previous year.
This growth is primarily driven by continued production expansion in Indonesia, which is expected to increase its output of low-grade nickel pig iron by 11.3% to 1.67 million tons.
Additionally, Indonesia's production of high-grade nickel is also forecasted to grow, contributing to the overall supply increase.
The expansion of nickel production in Indonesia is a significant factor influencing the global nickel supply outlook for 2025.
Nickel demand forecast for 2025
In 2025, global nickel demand is projected to be approximately 3.55 million metric tons.
This demand is primarily driven by two sectors:
- Stainless steel production: The stainless steel industry is expected to remain the leading driver of nickel demand, accounting for more than 60% of total demand in 2025. Demand for stainless steel is forecast to slightly increase in 2025.
- Electric Vehicle (EV) batteries: The demand for nickel in EV batteries is anticipated to grow significantly, with projections indicating that nickel demand from the battery industry will increase by 27% in 2025.
EV demand forecast 2025
Global electric vehicle (EV) sales are projected to experience steady growth over the next few years:
- 2024: The International Energy Agency (IEA) anticipates that EVs will account for approximately 18% of all car sales, up from 14% in 2022.
- 2025: The IEA forecasts that EVs will represent around 25% of global car sales.
- 2026: The IEA projects that EVs will make up about 30% of all car sales worldwide.
These projections indicate a consistent upward trend in EV adoption, driven by technological advancements, supportive policies, and growing consumer acceptance.
Nickel market forecast for 2025
The global nickel market is experiencing shifts in supply and demand dynamics in 2025.
Supply and demand forecast:
- 2024: The International Nickel Study Group (INSG) forecasts a surplus of approximately 170,000 metric tons, with primary nickel usage estimated at 3.346 million metric tons and production at 3.516 million metric tons.
- 2025: The surplus is expected to narrow to about 135,000 metric tons, as demand rises to 3.514 million metric tons and supply increases to 3.649 million metric tons.
- 2026: Projections indicate a potential deficit of 560,000 metric tons, with demand reaching 4.615 million metric tons and supply at 5.625 million metric tons. Techopedia
Key Factors Influencing the Market:
- Indonesia's Dominance: Indonesia continues to play a crucial role in the global nickel supply, despite recent supply chain disruptions. The country's nickel pig iron (NPI) output saw a 4.9% decline in the first quarter due to ore supply issues. This situation might lead to further downgrades in the International Nickel Study Group's surplus forecast unless mining quotas increase in the second half of 2024. MarketWatch
- Battery Demand: The demand for nickel in electric vehicle (EV) batteries is a significant driver. Sumitomo Metal Mining predicts that global demand for nickel used in batteries will grow to around 520,000 tons in 2025 from about 470,000 tons in 2024. Kitco
- Market Adjustments: In response to oversupply and declining prices, major producers like BHP have announced suspensions of operations in Western Australia. This move reflects the challenges faced by the industry amid a two-year price slump. Reuters
In summary, while the nickel market is expected to transition from a surplus in 2024 to a potential deficit by 2026, this path is influenced by production dynamics, technological advancements in battery chemistry, and volatile demand patterns in key sectors.
Nickel price chart on 10 years
The 10-year spot nickel chart is shown below.
Key take-aways from this version of the nickel price chart:
- The DNA of the nickel futures price chart is that it prints a series of smaller reversals.
- Between 2017 and 2021, each such reversal took one year roughly to complete.
- The blow-off top in 2022 was the result of the unusual situation in Russia, a major producer of nickel, which resulted in an epic short squeeze in London’s Metal Exchange.
- Since the 2023, nickel is working on reversals in the opposite direction, i.e. down.
- However, nickel futures found a floor in 2024, represented by a very strong horizonal trendline on the futures price chart.
Note that the 2024 bottom, which is solid so far, coincides with resistance in the period 2015 – 2021. For now, it looks like former resistance became support.
Nickel spot price chart on 25 years
Big picture, the spot nickel price chart looks to have had 2 major catalysts:
- The secular commodities boom with a big run-up in nickel prices in 2003/2004 as well as 2006/2007.
- To a lesser extent, the EV boom in 2021.
This highlights the strong correlation between nickel and its environment, confirming the need to predict the future path of nickel based on correlated markets.
Nickel price prediction 2025
Now we combine the predicted nickel supply trends for 2025 with the expected demand trends in EV and stainless steel, mapping those trends on the nickel price chart.
Given the expected supply surplus in 2025, although more narrow compared to 2024, we believe that the price of nickel will continue to consolidate in 2025.
The current strong bottom formation on the nickel price chart, which coincides with resistance in the period 2015 – 2021, is expected to hold on a 3-month closing basis.
The outlier for the price of nickel in 2025 and 2026 is EV demand. We recommend investors look track EV demand trends, especially as it relates to lithium-ion batteries, to understand if an unexpected spike in EV demand may push nickel prices from a sideways trend to a new uptrend.
The probability for nickel prices to remain rangebound in 2025 is 80%. The probability for nickel prices to start a new uptrend in 2025 is lower than 20%, but will rise dramatically in case EV sales pick up, exceeding forecasted EV demand for 2025.
2025 may be a great year to pick a bottom and start increasing nickel exposure in a long term portfolio.
Invalidation – a structural decline in the price of nickel in 2025 below its 2024 support.
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