Global nickel surplus to persist for 3rd consecutive year in 2026

• Indonesia drives higher output with low-cost NPI expansion
• Surplus may persist until 2030 if battery demand stays soft

Global nickel markets are expected to see a supply surplus for the third straight year in 2026, projected at a cumulative 256,000 tonnes (t), only slightly lower than the 263,000 t seen in 2025. Notably, global nickel demand is expected to grow 2.4% y-o-y to 3.52 million tonnes (mnt) in 2026, mainly due to steady stainless steel consumption, while supply is forecast to rise 2.0% to 3.78 mnt.

The surplus is largely driven by the continuous expansion of Indonesia’s low-cost nickel pig iron (NPI) output and insufficient demand growth from both the stainless steel and the battery sectors.

Indonesian production takes centre stage

Indonesia continues to dominate global nickel supply, leveraging its cost advantages and massive investments in downstream processing. In 2026, Indonesian NPI production is expected to climb up by 4.1% y-o-y to 1.76 mnt, outpacing other regions. Despite environmental concerns and attempts to curb industry output, Indonesia’s policies are likely to help maintain high production levels, keeping global supply growth above demand.

Demand growth led by stainless steel

Stainless steel manufacturing remains the mainstay of global nickel demand, representing about 70% of total consumption. In 2026, global stainless steel crude production is expected to rise by just under 3%, with Chinese output increasing by nearly 4%. Meanwhile, battery sector demand continues to disappoint, with lithium-iron-phosphate batteries gaining market share and limiting nickel’s growth in EV applications.

High-cost producers under pressure

Ongoing surplus conditions are compressing profit margins for high-cost nickel producers across regions such as Australia, Canada, and Russia. About 25% of global producers now operate at a loss, leading to mine closures and production cutbacks; however, these changes remain insufficient to restore market balance. Indonesia and select low-cost operators continue to thrive even in this challenging environment.

Outlook

With supply-side expansion slowing and demand from batteries potentially increasing from 2027 onward, a reduction in oversupply could materialise in the longer term. However, if battery growth rates remain soft, significant market imbalances could persist until 2030 or beyond. Industry participants should closely monitor Indonesian policy shifts, stainless steel trends, and battery technology developments as key indicators shaping nickel’s next decade.