From a peak in 2022 to a four-year low at the end of 2024, the key battery metal nickel price has been on a roller-coaster ride. In the year 2025, the nickel market is expected to face more challenges due to oversupply and weak demand.
Indonesia’s nickel production has soared from 358,000 tonnes in 2017 all the way to 2.2 million tonnes in 2023, accounting for more than half of global demand.
Meanwhile, nickel demand in the EV battery market, which is supposed to be the main driver of nickel demand growth, is less optimistic. In 2024, global EV sales, while growing by 25 per cent, will be driven mainly by China.
However, the Chinese market is rapidly shifting to lithium iron phosphate (LFP) battery technology, which requires no nickel at all. For the nickel market, this could be an unexpected blow.
Analysts expect nickel prices to fluctuate between $15,000 and $15,200 per metric tonne in 2025. So what are the key trends that will influence the prices this year?
Ewa Manthey, Commodity Strategist at ING, says the fundamental picture of the nickel market is unlikely to change significantly in 2025. Nickel’s weak performance is likely to continue, at least in the short term, amid weak demand and a persistent oversupply in the market.
Jason Sappor, Senior Analyst, Metals and Mining Research at S&P Global Commodity Insights, takes a similar view on nickel prices in 2025. The nickel market will remain in oversupply in 2025 as primary nickel production in Indonesia and China expands further, Sappor added, saying that low prices could lead to further production cuts across the industry.
Manthey believes that cuts in nickel supply in 2024 will have a limited impact on the market surplus, which could further cement Indonesia’s dominance of the sector.
Much of Indonesia’s nickel production is supported by Chinese investment. And right now, the U.S. and the European Union are looking to reduce their dependence on third countries for key raw materials such as nickel. Automakers and consumers in the U.S., Europe, Japan and South Korea need new supplies of nickel from allied countries.
The other biggest factor impacting the nickel market in 2025 could be the return of Donald Trump to the White House. During his campaign, Trump made several promises that could lead to a shift in U.S. policy on the environment and energy transition.
After taking office a fortnight ago, Trump has already rescinded an executive order signed by former President Joe Biden in 2021, cancelling U.S. government support for the electric vehicle industry.
A key unknown is what Trump will do with the Biden administration’s Inflation Reduction Act (IRA), a climate policy signed into law by the Biden administration in August 2022, which aims to comprehensively support clean energy industries such as electric vehicles, photovoltaics, wind, nuclear, energy storage, and hydrogen on U.S. soil, through $370bn in subsidies and tax incentives.
Trump argues that these high subsidies have fuelled inflation. Manthey noted that Indonesia has been trying to reduce Chinese ownership of new nickel projects to help its nickel industry qualify for IRA tax credits.
Stricter rules would create more problems in the nickel supply chain and would hinder Indonesia’s goal of expanding its export market to the United States. If the rules are tightened, primary and intermediate products will continue to be shipped to China.
Analysts expect nickel prices to remain under pressure next year as oversupply continues in the global market, with an average price forecast of $15,700 in 2025.
