The international nickel price has plummeted by 40%, what impact will it have?

Indonesia, as a resource-rich country with 60% of the world's nickel reserves, has recently found itself in a dilemma. Although Indonesia accounts for nearly two-thirds of the global nickel production capacity, enterprises are deeply in the red and forced to halt production due to losses. In 2025, the Indonesian government expanded nickel mining quotas (with an annual quota of 247 million tons) and suspended the construction of new thermal smelting plants, resulting in nickel pig iron production approaching its limit, while the capacity of wet smelting (such as MHP) continued to increase, and the supply of intermediate products shifted from tight to loose. The International Nickel Study Group (INSG) predicts that global primary nickel production will reach 3.735 million tons in 2025, far exceeding the consumption of 3.537 million tons, with an expected supply surplus of 198,000 tons, further expanding compared to 2024. The LME nickel inventory remains at around 200,000 tons, and the visible inventory of nickel at the domestic Shanghai Futures Exchange has rebounded to 250,000 tons, with a significant oversupply of refined nickel. The impact of the international nickel price crash on business presents a multi-dimensional differentiation. Firstly, it affects nickel production enterprises. The sharp decline in nickel prices directly leads to a significant reduction in enterprise sales revenue, while the costs of mining, processing, and transportation are relatively fixed, resulting in a significant decline in profitability. For example, in the first half of 2025, the nickel price dropped to approximately $15,000 per ton, a five-year low, compared to over $20,000 per ton in May 2024, and some enterprises even faced inventory impairment risks. High-cost nickel mining enterprises (such as Australia and BHP) were forced to close mines or suspend production due to long-term losses. Although Indonesia is the world's largest nickel producer, its production growth has slowed due to tax policy adjustments (such as increasing the tax rate for nickel products) and rising production costs, further exacerbating the industry's predicament. The persistently low nickel price may suppress enterprises' investment in new projects and even lead to the reduction of existing production capacity. For instance, after Russia considered restricting nickel exports, the market briefly rebounded, but it lacked sustained support, reflecting enterprises' lack of confidence in the future market.

Secondly, it affects the commercial supply chain. Nickel is a key raw material for stainless steel production, accounting for 60%-65% of the cost. The decline in nickel prices reduced the production costs of stainless steel enterprises in the short term and enhanced their price competitiveness. However, if the nickel price remains low, it may lead to a downward adjustment in market expectations for stainless steel demand, causing enterprises to adjust their investment and production plans. Although the demand for ternary batteries (NMC) has declined due to the expansion of the market share of lithium iron phosphate batteries, the decline in nickel prices still reduced the costs of battery producers, benefiting the development of industries relying on batteries, such as electric vehicles. However, enterprises may adjust their nickel resource reserve strategies, reducing long-term inventories. The decline in the nickel price directly reduced the raw material costs for electroplating enterprises and improved their profitability; in the aerospace field, the cost reduction of high-end nickel alloy materials alleviated pressure, but it may affect enterprises' investment in research and development of high-end materials.

Thirdly, it affects the international commercial landscape. The decline in the international nickel price directly led to a decrease in the foreign exchange income of exporting countries, affecting the balance of their economies. For example, if Russia restricts nickel exports, although it may temporarily push up the international nickel price, in the long run, it will harm its own interests, so there is limited room for policy adjustment. The decline in the nickel price enables importing countries to increase imports at a lower cost to meet domestic demand. However, if the global nickel supply surplus persists, importing countries may face trade friction risks, such as the imposition of tariffs by Europe and the United States on Chinese stainless steel products. Indonesia, with its low-cost advantages (such as cheap labor, electricity, and raw materials), dominates global nickel supply, while high-cost production areas such as Australia and BHP have contracted production capacity, further consolidating Indonesia's position as a supply center.

In conclusion, the decline in the international nickel price is profoundly reshaping the global nickel market landscape. In the short term, the focus of market speculation remains on policy changes in Indonesia and the pace of inventory liquidation; In the long term, the nickel price will need to rely on either an unexpectedly strong growth in the demand for new energy or a significant reduction in supply to achieve a rebalancing. Otherwise, the depressed trend may persist into the next cycle.