Posted on 14 Oct 2025
The fundamentals of nickel look “really bad” due to huge growth in Indonesian supply in recent years, Macquarie analyst Jim Lennon told the LME Metals Seminar on Monday in London.
Indonesia’s share of global supply has surged from 30% to 70% over the last five years, he says, adding that the Australian bank projects a further 16% growth in Indonesian supply both in 2025 and 2026. With growing output from the Asian country, the nickel market has been in surplus since 2022, where it is projected to remain until 2030.
“Oversupply remains the base case, but when you’ve got 70% of supply in the hands of one country, and you’ve got policymakers in that country scrutinising what their policy should be, it does leave some room for doubt,” Lennon told the event, attended by Kallanish.
According to the analyst, the LME price has bottomed out at about $15,000/tonne, with 40% of the industry cash flow negative. Since around 2022, there have been about half a million tonnes of production cuts in the rest of the world, with ex-China and Indonesia production lowest since 1990. This is “a very, very serious situation, an unsustainable situation for the industry,” Lennon stresses.
Interventions by the Indonesian government would be “the only thing that could really help the market,” Lennon points out. Jakarta is currently reviewing the environmental permits of existing mines and has seized others.
The country has also recently shortened the validity of mining production quotas from three years to one year. This measure is fuelling speculation that approvals could be delayed until February-March, according to Lennon.
“We could go through a period towards the end of this year where we see a number of mines being curtailed for environmental reasons and other mines not getting environment permitting,” he adds. “That’s really the only significant factor in the market. The government is looking at it very, very closely, and that could be the major black swan, I think, in the market later this year, early next year.”
Meanwhile, although demand for the metal continues to grow, it is now switching back to nickel’s traditional driver: stainless steel. The battery market has “moved away” from nickel, with the metal’s use in batteries having slowed “quite dramatically,” the analyst points out.
This is primarily because alternative battery chemistries, such as lithium iron phosphate (LFP) batteries, are over 50% cheaper than nickel-containing batteries. Nickel batteries will continue to grow only in very high-end vehicles, he predicts.
The comments come as the International Nickel Study Group (INSG) this month projected primary nickel market surplus to widen significantly in 2025 and 2026.
Source:Kallanish
