Nickel prices on the London Metal Exchange (LME) exploded by more than 10% in a single session, marking their biggest one-day gain in over three years. However, this meteoric rise appears to be a speculative frenzy disconnected from stubbornly weak underlying fundamentals, suggesting the rally may be short-lived.
The sharp surge propelled LME nickel to a high of $18,785 per ton, extending a stunning near-30% climb since mid-December. The rally has been fueled by two main drivers: a wave of speculative investment flowing into China’s domestic metals markets, which spilled over to international exchanges, and rising concerns over potential supply risks in top producer Indonesia, temporarily overshadowing the market’s massive physical surplus.
This exuberance is fundamentally fragile. The nickel market remains plagued by a severe structural oversupply. Years of relentless output growth from Indonesia have swelled global stockpiles. LME warehouse inventories ballooned to over 254,364 metric tons by the end of November 2025, a significant increase from the start of the year.
“The global market is still forecast to remain in surplus — around 261,000 MT in 2026,” said Ewa Manthey, Commodities Strategist at ING. This persistent oversupply creates a formidable ceiling for sustained price gains.
Compounding the problem, both pillars of nickel demand are wobbling. The stainless-steel sector, accounting for over 60% of global nickel consumption, continues to be dragged down by the prolonged slump in China’s property market, with no meaningful recovery in sight.
Meanwhile, growth from the electric vehicle (EV) battery sector—once a primary bullish narrative—has softened. Battery manufacturers are increasingly shifting towards cheaper, nickel-free lithium-iron-phosphate (LFP) chemistries. Additionally, the scaling back of EV purchase incentives in key markets like the U.S. and policy adjustments in Europe are dampening overall demand.
Facing this dual headwind of ample supply and tepid demand, most institutions hold a cautious outlook. Analysts widely view the recent spike as primarily sentiment-driven, lacking a sustainable foundation.
ING forecasts an average nickel price of just $15,250 per ton for 2026, closely aligned with the World Bank’s projection of $15,500. Manthey emphasized that without large-scale, coordinated supply cuts or a much stronger-than-expected demand recovery, prices are unlikely to hold at elevated levels.
In summary, while the nickel market’s recent bloom has been spectacular, its brilliance is likely fleeting. Without a fundamental reversal in its oversupplied dynamics, prices are expected to revert to a weaker trend once the current speculative fervor fades.
