Nickel Is Hated Enough To Be Loved

After a volatile but overall bearish year, nickel is closing 2025 on a positive note. One of the "forgotten" metals has turned bullish, rallying 5.5% in a month. Yet, time will show whether this run is a legitimate turnaround or a sector-based tailwind.

Still, in the last two years, nickel remained a hated asset. Prices have collapsed,  going as low as $14,600 per ton last month. Major Western producers shuttered, and headlines screamed oversupply and battery substitution.

Precisely for that reason, nickel is beginning to look like a genuine contrarian opportunity – but one with serious structural risks that investors cannot ignore.

Post-Crash Hangover

The recent price crash is the result of stainless steel demand growth coinciding with an EV demand projection that has skyrocketed. After the EV narrative took hold in the late 2010s, capital poured into new projects, particularly in Indonesia. Output exploded from 800,000 metric tons in 2019 to 2.2 million in 2024.

The result was a structural surplus. The International Nickel Study Group estimated a 179 kt surplus in 2024, rising to 198 kt in 2025. LME warehouse inventories swelled above 254,000 tons.

Then, both pillars’ demand wobbled. The troubled Chinese property sector dampened the steel demand. Meanwhile, the EV thesis fractured.

Nickel-rich chemistries (NMC, NCA) continued to grow, but much more slowly, as cheaper, nickel-free LFP batteries gained share. By late 2024, LFP demand was increasing by 7% year-on-year, compared with just 1% for nickel-bearing batteries. Policy shocks, such as the repeal of the US$7,500 US EV tax credit and the first EV sales decline since 2019, further hurt sentiment.

Oversupply on Fragile Foundations

Indonesia is the key market, accounting for over half of global production in 2025. But concentration carries systemic risk.

Indonesian low-grade laterite nickel is among the most carbon-intensive in the world, heavily reliant on coal power. Mining operations have driven deforestation, water pollution, and increased social conflict, CRI research showed.

Crucially, Indonesia is not an energy superpower; it is an energy importer. Its industry depends on secure, affordable fossil fuel imports and continued tolerance for high emissions.

Any disruption to energy supply, tightening of environmental rules, or carbon border adjustments from Western markets could sharply raise costs or constrain exports.

Australia has been the biggest casualty of this oversupply. High-cost Australian sulfide operations simply could not compete with Indonesia's scale and lower operating costs. Through 2024, BHP (NYSE:BHP) suspended its Nickel West division, First Quantum (OTCPK: FQVLF) put Ravensthorpe into care and maintenance, and other mines such as Kambalda and Savannah shut down. Australia's annual production collapsed from over 150,000 tons to about 60,000.

Still, surviving low-cost producers and future "green nickel" projects in Canada and Australia could eventually harness the ESG premia as industries de-risk from Indonesian "dirty" supply.

The Contrarian Case

Nickel's contrarian case is both cyclical and structural. Price destruction has already forced large-scale shutdowns and capex deferrals in the West. Structurally, the demand outlook remains in the mid-single digits. Nickel battery demand is expected to double by 2030, despite the LFP trend.

While a heavy bet in 2026 would likely be early, a surplus flipping into a deficit in the late 2020s would be unsurprising, Macquarie's research shows. One tailwind for the EV thesis is that high-performance, long‑range vehicles continue to rely on nickel-rich chemistries.

Yet nickel contrarianism is far from risk‑free. The biggest risk is that Indonesia keeps flooding the market longer than expected, maintaining output growth to defend market share even at thin margins. A second, equally serious risk is technological. Faster‑than‑expected adoption of LFP or sodium‑ion batteries could cap or even reduce long‑term nickel demand in batteries. Finally, the EV transition itself remains policy‑sensitive.

However, for patient investors, nickel might be a classic deep-value contrarian commodity. One that is bruised, oversupplied, and out of favor but with a credible path to rebalancing, and a dangerous dependence on one energy‑hungry, politically complex supplier at the center of its future.

Price Watch: Sprott Nickel Miners ETF (NASDAQ:NIKL) is up 49.81% year-to-date.

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