Nickel prices have taken a beating over the past couple of years, and if UBS is right, they’re not bouncing back any time soon.
After a period of rampant supply growth and a battery investment boom that never quite lived up to the hype, the market is still awash with excess metal. Some production cuts and project delays have started to slow things down, but UBS expects the global surplus to persist well into 2026.
Demand hasn’t collapsed. In fact, nickel has held up better than most base metals. But it is still not enough to absorb ongoing supply.
Stainless steel makers, the metal’s biggest buyers, are pulling back in the US and Europe. Meanwhile, the battery market is growing more slowly than hoped, without delivering any real upside surprises.
Production in Indonesia, now the core of the global nickel industry, is also changing.
Lower-grade nickel pig iron (NPI) growth is starting to plateau, while new high-grade projects using high-pressure acid leach (HPAL) are coming online. These are more suitable for batteries but will keep supply rising, just at a slower pace.
Ore availability may act as a brake. Indonesia’s government controls the quota system and is starting to tighten it, which has pushed up the cost of raw materials.
UBS notes that this is putting pressure on producers, particularly those with weaker margins. But so far, the 250,000 tonnes of announced supply cuts are not enough to rebalance the market.
The bank expects global demand to grow by around 4 to 5% a year through to 2028, supported by stainless steel and a modest contribution from batteries.
However, with inventories still building and prices hovering near the upper end of the cost curve, the market remains oversupplied.
For now, nickel prices look likely to stay under pressure. The days of tight supply in Class 1 nickel and a surge in battery-linked optimism have faded. Investors should expect a slower, more cost-driven grind back to balance.