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Nickel prices remained subdued during the second and third weeks of December 2024, driven by a persistent surplus owing to Indonesia’s soaring production levels, and weak demand from key sectors such as stainless steel and electric vehicle (EV) batteries. Indonesia, now producing more than half of the world’s nickel, continued to dominate the market.

Indonesia has been attracting significant foreign investment, primarily from Chinese firms, leading to an unprecedented expansion in its smelting capacity. In 2024, the country hosted 44 smelters, up from just three in 2014. Despite occasional tightness in the domestic nickel ore market, Indonesian producers ramped up primary nickel output, solidifying their position as a key global supplier.

Demand for nickel, however, continued to falter. The stainless steel sector, which accounts for the largest share of nickel consumption, struggled with weak buyer interest and excess inventory. Distributors remained cautious, resisting forward purchases despite declining prices. China’s slow economic recovery and modest growth in manufacturing activity also failed to provide a significant boost to stainless steel production. While recent government stimulus measures in China had stabilized its manufacturing sector, the impact on nickel demand remained limited.

The EV battery sector, a growing but still secondary consumer of nickel, also faced headwinds. Slower EV sales, increased adoption of lithium iron phosphate (LFP) batteries, and a shift toward plug-in hybrid vehicles dampened demand for nickel-based batteries. Batteries accounted for just 17% of total nickel demand in 2024, leaving the market heavily reliant on the struggling stainless steel industry.

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By mid-December, nickel prices showed signs of stabilization but maintained a downward bias. The surplus of Class 1 nickel, largely driven by Indonesian and Chinese production, further added to the pressure. Deliveries of refined nickel into the London Metal Exchange (LME) warehouses from these countries continued to rise, underscoring the imbalance between supply and demand.

As the year draws to a close, the outlook for nickel remains challenging. With global primary nickel production expected to rise in 2025, the market is likely to stay in surplus, keeping prices under pressure. While potential upside exists in the form of increased stainless steel output or supply restrictions in Indonesia, uncertainties around EV demand and geopolitical factors may continue to weigh on the market in the near term.