According to a report by the Centre for Research on Energy and Clean Air (CREA), stainless steel remains the main end-use sector for Indonesia’s nickel despite ongoing “green nickel” marketing efforts. The report says 83% of Indonesia’s nickel output is expected to go into stainless steel in 2025, compared with only 17% for EV batteries. By 2030, stainless steel is still projected to account for 51% of nickel demand, above the 18% expected for the battery sector, underscoring stainless steel’s continued dominance in Indonesia’s nickel demand structure.

Nickel prices remained weak, with SHFE nickel futures fluctuating downward. The most-traded contract closed 0.92% lower at 118,570 yuan/mt. The prices of laterite ore from the Philippines remained firm at the ore end, but high-priced ore continued to squeeze the profits of mid- and downstream products, leading to a certain deviation between the trends of nickel ore and the futures market. Nickel prices have continued to weaken recently, approaching the cost of pyrometallurgy and compressing the profits of nickel enterprises. However, there have been no large-scale production cuts by enterprises so far, and the supply surplus situation has not significantly eased. The nickel ore market has been relatively quiet, with ore prices remaining stable. It is expected that nickel ore resources for July will start to be sold this week. In the Philippines, mines are mostly adopting a wait-and-see attitude and are cautious in quoting prices. Some downstream iron plants have entered the raw material procurement and stockpiling period, but due to profit losses, they are not highly willing to accept excessively high nickel ore prices. In Indonesia, the shortage of nickel ore supply persists, with declining ore grades and high prices for high-grade ore remaining. The domestic trade benchmark price for June (Phase II) is expected to fall by approximately $0.3-0.5. The current domestic trade premium remains at 26-28, and subsequent premiums will enter a negotiation period. The end-use demand for new energy is in the off-season, with production schedules for ternary cathode materials in June declining. Battery manufacturers have previously stockpiled sufficient raw materials, resulting in low procurement demand. Nickel sulphate prices have remained firm, maintaining a relatively high level. The tight supply situation for intermediate products at the raw material end continues, with intermediate product prices remaining firm. However, with some nickel iron production lines currently switching to produce nickel matte, the tight supply situation for intermediate products may improve, putting pressure on further nickel sulphate price increases. Downstream ternary cathode manufacturers are not highly willing to accept high-priced nickel sulphate, and with demand remaining weak, nickel sulphate continues to face pressure. In the short term, supported by nickel sulphate costs, industrial profits remain low, and prices are maintained at cost-based pricing levels. Regarding the outlook, Jinrui Futures commented that with the resource end being suppressed by stainless steel, the driving force for cost increases in Class 1 nickel has weakened. Meanwhile, as Indonesia's supply-side policies have become more stable, the sustainability of additional support for Class 1 nickel demand in H2 is in question. The driving force for nickel price increases has weakened, while there is still cost support on the downside. Anchoring on the cost of pyrometallurgical electrodeposited nickel, the price range may converge.

The sharp fluctuations in nickel prices in May were mainly due to macro disturbances. After excluding abnormal disturbances in the candlestick, SHFE nickel futures prices mainly showed a slow decline under the dual pressures of "weak fundamentals" and "high inventory".

This week, nickel prices exhibited a pattern of repeated fluctuations. As of May 16, the average price of SMM1# refined nickel was reported at 126,140 yuan/mt, up approximately 0.7% WoW. The most-traded SHFE nickel contract closed at 124,060 yuan/mt, up slightly by 1.65% WoW, while LME nickel prices closed at $15,665/mt, down 1.17% WoW. Early in the week, nickel prices rebounded due to bullish factors such as the US-China trade tariff agreement and rumors of a mining ban in the Philippines. However, the upside potential remained constrained by high inventory pressure resulting from supply-demand surplus, and the momentum for nickel prices to break through the 127,000 yuan/mt price platform was insufficient. On the macro front, the current bullish drivers in the market are primarily the easing of US-China trade tensions, with both sides reaching an agreement to "remove 91% of tariff hikes." Additionally, US inflation cooled, with the April CPI YoY growth rate at 2.3% (a three-year low) and core CPI YoY at 2.8%, alleviating market concerns about a more hawkish US Fed. However, expectations for US Fed interest rate cuts have been postponed, with the extent of interest rate cuts this year narrowing from 75 basis points to 55 basis points, and the timing of the first interest rate cut delayed to September, injecting some pessimism into the market. From the perspective of industrial fundamentals, the surplus situation of nickel remains unchanged, with weakened cost support. The boost to downstream nickel demand from the reduction in US-China tariffs has yet to materialize, and transactions are still dominated by just-in-time procurement, with low stockpiling sentiment. In the outlook, SMM believes that nickel prices will continue to fluctuate amid the tug-of-war between cost support and supply-demand surplus. The spot price range for refined nickel is expected to be 122,150-130,000 yuan/mt, and the fluctuation range for SHFE nickel is expected to be 120,000-128,000 yuan/mt. However, attention should still be paid to the sentiment disturbances caused by policy variables on nickel prices.

Nickel prices fell to a five-year low of around USD 15,000/ton in Q1 2025, a sharp decline from over USD 20,000/ton in May 2024. The main causes include oversupply, rising costs, and weak demand. As the world’s largest nickel producer, Indonesia saw a slowdown in production growth and implemented a new tax policy starting April 26, which increased royalty rates on nickel products—further worsening the challenges faced by nickel producers already under pressure from rising ore prices. Tensions in U.S.-China trade relations, particularly a new round of tariffs imposed by the U.S., have further fueled market pessimism. Following Trump's tariff announcement on April 2, nickel prices on the London Metal Exchange dropped 11.5% within a week. These tariffs could suppress China’s manufacturing activity, thereby weakening demand in the world’s largest nickel-consuming country. Although electric vehicle adoption continues to grow, the growth rate of nickel demand in the battery sector has slowed significantly, as manufacturers shift toward more cost-effective nickel-free battery chemistries such as lithium iron phosphate (LFP) batteries. Between January and February 2025, demand for nickel-containing NMC (nickel-manganese-cobalt) batteries fell by 19%. In 2024, the battery industry accounted for approximately 11.5% of total nickel demand.

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