After a volatile but generally bearish year, nickel ends 2025 on a positive note. One of the ‘forgotten’ metals has turned bullish, rising 5.5% in a month. Still, time will tell whether this run is a legitimate turnaround or a sectoral tailwind.
Yet nickel remained a hated asset over the past two years. Prices have collapsed, falling to $14,600 per tonne last month. Major Western manufacturers closed their doors and headlines screamed about battery oversupply and replacement.
For that very reason, nickel is starting to look like a real contrarian opportunity – but one with serious structural risks that investors cannot ignore.
Hangover after the crash
The recent price crash is the result of growth in demand for stainless steel coinciding with a projection of demand for electric vehicles that has skyrocketed. After the EV story took hold in the late 2010s, capital flowed into new projects, especially in Indonesia. Production exploded from 800,000 tons in 2019 to 2.2 million tons in 2024.
The result was a structural surplus. The International Nickel Study Group estimated a surplus of 179 kt in 2024, rising to 198 kt in 2025. LME warehouse stocks rose above 254,000 tonnes.
Then demand faltered from both pillars. The troubled Chinese real estate sector dampened demand for steel. Meanwhile, the EV thesis broke.
The nickel-rich chemistry (NMC, NCA) continued to grow, but at a much slower rate, as cheaper, nickel-free LFP batteries gained market share. At the end of 2024, LFP demand increased 7% year-on-year, compared to just 1% for nickel-containing batteries. Policy shocks such as the repeal of the $7,500 US tax credit and the first decline in electric vehicle sales since 2019 have further damaged sentiment.
Oversupply on fragile foundations
Indonesia is the most important market, accounting for more than half of global production in 2025. But concentration entails systemic risks.
Indonesian low-grade laterite nickel is among the most carbon-intensive in the world and relies heavily on coal energy. Mining activities have led to deforestation, water pollution and increased social conflict. CRI research showed.
Crucially, Indonesia is not an energy superpower; it is an energy importer. The industry depends on safe, affordable fossil fuel imports and continued tolerance for high emissions.
Any disruption to energy supplies, tightening of environmental regulations or adjustments to the carbon limits of Western markets could sharply increase costs or limit exports.
Australia is the biggest victim of this oversupply. Australia’s expensive sulphide operations simply could not compete with Indonesia’s scale and lower operating costs. Until 2024, BHP (NYSE:BHP) have been suspended Nickel West division, First quantum (OTCPK: FQVLF) set Ravensthorpe in care and maintenance, and other mines such as Kambalda And Savannah to block. Australia’s annual production fell from over 150,000 tonnes to around 60,000 tonnes.
Still, surviving low-cost producers and future ‘green nickel’ projects in Canada and Australia could ultimately leverage the ESG premiums if industries are less at risk from Indonesia’s ‘dirty’ supply.
The contrarian case
The opposite case of Nickel is both cyclical and structural. Price destruction has already led to large-scale shutdowns and postponements of capital investments in the West. Structurally, demand prospects remain in the mid-single digits. Demand for nickel batteries is expected to double by 2030, despite the LFP trend.
While a heavy bet would likely be early in 2026, a surplus turning into a deficit in the late 2020s would not be a surprise. research shows. One tailwind for the EV thesis is that high-performance, long-range vehicles still rely on nickel-rich chemistry.
Yet the unruly nickel is far from risk-free. The biggest risk is that Indonesia continues to flood the market for longer than expected, maintaining production growth to defend market share even on tight margins. A second, equally serious risk is of a technological nature. Faster-than-expected adoption of LFP or sodium-ion batteries could limit or even reduce demand for nickel in batteries in the long term. Finally, the EV transition itself remains policy sensitive.
For patient investors, however, nickel could be a classic high-value contrarian commodity. A country 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 the future.
Check price: Sprott Nickel Miners ETF (NASDAQ:NIKL) is up 49.81% since the beginning of the year.
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