What Nickel Is Used For and Why 2026 Remains Challenging

Understanding nickel’s primary applications is key to grasping market dynamics in 2026. Nickel serves as a critical material in stainless steel production—accounting for over 60 percent of global nickel consumption—and increasingly in electric vehicle battery chemistry. Yet despite these vital uses, the metal faces a challenging year ahead.

Nickel Applications and Current Market Reality

Nickel’s main industrial application centers on stainless steel manufacturing, predominantly serving construction and housing sectors. The secondary growth driver emerged from EV battery production, where nickel-based chemistries powered the surge in production capacity. However, both demand channels are weakening. China’s property sector, which anchors stainless steel demand globally, continues deteriorating with November 2025 sales down 36 percent year-on-year. Simultaneously, battery makers are pivoting toward cheaper lithium-iron-phosphate (LFP) technology, which now matches nickel chemistry in performance while offering cost advantages and improved safety profiles.

The Supply Glut Pressuring Prices

Indonesia dominates global nickel supply, producing 2.2 million metric tons in 2024—nearly three times its 2019 output. The government raised its 2025 quota to 298.5 million wet metric tons, further swelling inventories. London Metal Exchange stockpiles climbed to 254,364 MT by late November 2025, compared to 164,028 MT at year-start. This abundance pushed nickel prices down to $14,295, approaching the profitability floor for low-cost producers.

Speculation about Indonesian production cuts emerged, with proposals to trim 2026 output to around 250 million WMT—down sharply from 379 million WMT in 2025. However, these remain discussions. Market analysts expect Indonesia to maintain current levels given new policy frameworks introduced throughout 2025, including adjusted royalty structures and tightened license terms granting government greater production oversight.

Demand Headwinds Compounding Weakness

Beyond oversupply, demand trajectories disappoint. EV battery nickel demand rose just 1 percent year-over-year in September, while LFP demand surged 7 percent. Recent policy reversals—including US EV tax credit elimination and the EU’s postponement of combustion engine bans—further dampened battery metal enthusiasm. Ford’s $19.5 billion EV writedown and pivot toward extended-range vehicles signal industry retrenchment, with American EV sales dropping 46 percent in Q4 compared to Q3.

Price Outlook for 2026

Market consensus points downward. ING forecasts an average price of $15,250 for 2026, while the World Bank projects $15,500, rising modestly to $16,000 by 2027. Nornickel estimates a global refined nickel surplus of 275,000 MT next year. Without significant supply coordination or unexpected demand jolts, prices face difficulty sustaining above $16,000. Recovery to the $19,000-plus range that would attract western producer investment appears unlikely given current fundamentals.

The nickel market remains trapped between structural oversupply and dampening demand growth, with what nickel is used for increasingly contested by cheaper alternatives. Until either Indonesian production meaningfully contracts or demand dynamics shift, 2026 promises continued downward pressure on valuations and producer profitability.