Nickel prices edged higher on Wednesday, supported by a stronger US dollar against most major currencies and mixed market expectations for the industrial metal.
UBS analysis last week indicated that the global nickel market is likely to remain in surplus until 2026, despite recently announced production cuts.
The report noted a “significant surplus” from 2022 through 2024, adding that current prices and market behavior already reflect weak fundamentals. Analysts do not anticipate a near-term demand recovery, citing declining stainless steel output and limited prospects for battery demand growth.
On the supply side, some progress toward rebalancing the market was made in 2024, with around 250,000 tonnes in production cuts and project delays totaling another 140,000 tonnes. Still, UBS believes these measures are insufficient, as Indonesia continues to add new production capacity despite some limitations in ore availability.
Although global nickel demand has shown relative resilience compared to other base metals in recent years, oversupply has led to output reductions in the stainless steel sector in both China and Indonesia. UBS expects nickel demand to grow by 4–5% annually between 2025 and 2028, down from 9% annually between 2021 and 2024.
While UBS forecasts smaller surpluses in the 2025–2028 period, they are still expected to be “large enough to drive up refined nickel inventories on the London Metal Exchange (LME).” The report also pointed out that the current nickel price sits in the upper quartile (75%) of the global cost curve — a level that has historically offered price support — but warned that nickel has traded within the cost curve range for extended periods before.
Second Half Outlook
Analysts now anticipate a significant rebound in nickel prices during the second half of 2025, driven by a shortage of nickel ore and mine closures in Indonesia.
In mid-June 2025, the Indonesian government revoked mining licenses for several nickel mines after discovering they were operating on protected islands, where mining is legally prohibited. Though these four mines represented a small share of Indonesia’s total annual output, they accounted for a large portion of the country’s remaining high-grade nickel ore reserves.
Even before the mining halt, declining ore quality — particularly medium and high-grade deposits — had already begun to weigh on Nickel Pig Iron (NPI) production.
Separately, EU member states agreed to a sweeping overhaul of customs procedures to align with digital and global trade developments. However, the first phase of changes will not take effect until 2028 and will initially apply only to e-commerce firms, as part of a long-term plan to reform the EU’s customs framework.
Meanwhile, the US dollar index rose 0.2% to 98.3 by 16:20 GMT, reaching a session high of 98.4 and a low of 97.9.
In trading, spot nickel prices climbed 0.5% to $15,007 per tonne by 16:30 GMT.
