The International Nickel Study Group (INSG) has forecast that the global nickel market will remain in surplus for at least two more years. INSG said on Tuesday that the surplus would reach 209,000 metric tons in 2025, rising to 261,000 tons in 2026, as output growth continues to outpace demand.
“Global demand for nickel is expected to increase to 3.82 million tons in 2026 versus 3.60 million in 2025,” the Lisbon-based group said, noting that production is forecast to grow even faster, from 3.81 million to 4.09 million tons over the same period.
The widening gap highlights a structural challenge for one of the most essential industrial metals. Nickel, used in stainless steel and electric vehicle batteries, has seen demand growth slow as cheaper lithium-iron-phosphate batteries gain traction. Yet supply, particularly from Indonesia, remains resilient.
“Demand growth will be driven by stainless steel, similar to 2025, while demand for batteries will likely stay slow, with growth expected to be modest,” Shirou Imai, general manager at Sumitomo Metal Mining (OTC:SMMYY), said to Reuters.
Indonesia, which accounts for more than half of the global nickel supply, has been at the center of this expansion. Still, its production continues to rise despite government efforts to put the sector under control, given the environmental concerns.
The efforts include delaying the issuance of annual work permits (RKABs), seizing land without obtaining forestry approvals, and sanctioning firms for failing to meet reclamation guarantees. The Energy and Mineral Resources Ministry recently shortened the validity of mining work plans to one year, effectively rendering the pre-2025-approved multi-year RKABs invalid, according to Argus Media.
Indonesia’s push to dominate the global nickel industry has come at a heavy ecological cost, with reports of deforestation, sedimentation, and coral reef destruction in key mining regions such as Raja Ampat and Halmahera. Watchdog groups argue that companies have failed to restore damaged ecosystems adequately, and that local communities bear the brunt of pollution.
“The nickel industry has polluted rivers and seas, destroyed forests, poisoned bodies, and now criminalized villagers,” Hema Situmorang, campaigner for Mining Advocacy Network, said per Asia News Network. Government audits and environmental ratings have done little to rebuild public trust, as activists continue to document the social and ecological toll of rapid extraction.
Nickel’s importance to the energy transition means global attention on Indonesia is unlikely to fade. The country’s laterite ore is essential for producing nickel pig iron and mixed hydroxide precipitate. And, while these processes are highly energy-intensive, Indonesia, as a net energy importer, has benefited from subdued oil prices, making production competitive even as nickel prices remain well below the recent highs.
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