Nickel supply in 2026

The big question going into the new year is if nickel supply and demand will come into balance.

The most significant contributing factor over the last several years has been an abundance of supply from Indonesia, which has become the world’s top nickel producer.

The US Geological Survey estimates that full-year 2024 nickel production came in at 2.2 million MT, a staggering increase over the 800,000 MT it believes the nation produced in 2019.

In February 2025, the Indonesian government changed its quota system, effectively increasing nickel ore output to 298.5 million wet metric tons (WMT) from 271 million WMT in 2024. At the time, it said the increased production capacity was being limited to major production areas and was designed to reduce supply pressures.

The increase helped drive the amount of nickel sitting in exchange warehouses. Stockpiles at the London Metal Exchange (LME) had risen to 254,364 MT by the end of November, up from 164,028 MT at the start of 2025.

Meanwhile, the nickel price sank to US$14,295, toward the lower end of profitability for low-cost Indonesian miners.

The profitability question has raised the possibility of cuts — according to Shanghai Metal Market, the Indonesian government is proposing to cut nickel ore output to around 250 million MT in 2026. If the reduction comes to pass, it would mark a significant decline from the 379 million WMT laid out by Indonesia in 2025. Discussions on the final amount are ongoing, and the outlet states that it will be some time before the target is finalized.

“The global market is still forecast to remain in surplus — around 261,000 MT in 2026 — so further cuts would need to be significant to alter fundamentals,” she explained.

Additionally, there could be a wait-and-see approach as other new policies adopted by the Indonesian government in 2025 begin to take hold. The first, introduced in April, saw a shift from a flat 10 percent royalty to a more dynamic rate of 14 to 18 percent, depending on nickel prices. The second came in October, when the government cut the validity period of mining licenses from three years to one, providing the government greater oversight of production levels.

These prices, however, aren’t supportive of western producers, which began curtailing operations in 2024 when the LME average price was US$16,812 and reached US$21,000 in May of that year.

For her part, Manthy suggested that to get back to that range, there needs to be a more coordinated approach to constraining supply, and it may not make an immediate difference.

“To push prices to that range, cuts would need to be deep enough to erase most of the projected surplus. Given the scale — hundreds of thousands of MT — this seems unlikely without coordinated action. Even then, investor sentiment would probably require sustained prices above US$20,000 to materially improve producer attractiveness,” she said.

Nickel demand in 2026

The challenges faced by nickel go beyond oversupply; demand growth for the base metal is also soft.

Nickel’s primary use case is in the production of stainless steel, much of it destined for the Chinese housing market, which has yet to recover from its collapse in 2020.

While the Chinese government tried to stabilize the market in 2024 and earlier in 2025, it has done little to reverse the downward trend. According to a CNBC report on December 2, November sales were down 36 percent from the same period in 2024, and declined 19 percent through the first 11 months of the year.

“China’s property sector weakness has weighed on stainless steel demand, which accounts for over 60 percent of global nickel consumption. Even with broader economic growth, this stagnation has kept nickel prices subdued. A property turnaround would help, but given the surplus outlook, price upside would likely be limited,” Manthey said.

Adding to nickel’s woes is soft growth from the EV market.

Much of the increase in nickel production over the last five years was to fuel the need for EV batteries, but more recently producers like Contemporary Amperex Technology (SZSE:300750,HKEX:3750), one of the world’s largest battery makers, have shifted chemistry to lithium-iron-phosphate (LFP).

Nickel-manganese-cobalt batteries had been seen as superior due to their higher energy density and longer range. But recent advances in LFP technology have erased that gap, with vehicles using the chemistry achieving ranges of over 750 kilometers. Additionally, LFP batteries are cheaper to produce and less volatile, making them safer.

According to a December 1 Reuters article, nickel battery demand rose 1 percent year-on-year in September, while LFP battery demand increased 7 percent. However, the news outlet notes that most of the nickel demand was likely driven more by a rapidly growing EV market than by the benefits of its chemistry.

Although Reuters also notes that nickel chemistry remains the dominant battery technology in western EV markets, that too comes with a caveat, especially in the US, where the elimination of the EV tax credit in September has cratered EV demand. While US EV sales reached a record 1.2 million through the first nine months of 2025, much of that was driven by consumers seeking to take advantage of the US$7,500 credit before it expired.

Early data from Cox Automotive analysis indicates that American EV sales are down 46 percent in Q4 from the third quarter, and 37 percent from the same period last year.

Against that backdrop, Ford Motor (NASDAQ:F) has scaled back its EV plans, taking a US$19.5 billion writedown, and will pivot to extended-range EVs — which use gas-powered engines to augment range — and hybrid cars. Similarly, in mid-December, the EU dropped its plans to ban the sale of all internal combustion engine light vehicles by 2035.

These policy changes likely aren’t good news for nickel watchers.

“Any slowdown in energy transition policies adds to bearish sentiment for battery metals, including nickel,” Manthey said.

Nickel price forecast for 2026

Manthey suggested that nickel prices will remain under pressure throughout 2026.

“We expect prices to struggle to hold above US$16,000 given the surplus. Upside risks hinge on unexpected supply disruptions or stronger-than-forecast stainless and battery demand, but sustained levels above US$19,000 look unlikely under current fundamentals. We see prices averaging US$15,250 in 2026,” she said.

That’s in line with the World Bank’s 2026 nickel price outlook of US$15,500, rising to US$16,000 in 2027.

The primary reason for these projections is the ongoing nickel market surplus.

While it didn’t make a price prediction, Russia’s Nornickel, one of the world’s largest nickel producers, suggests that the market will see a surplus of 275,000 MT of refined nickel in 2026.

Low prices will be a challenge for nickel producers and investors alike. Until there is a shift in market fundamentals, a rebound for nickel doesn’t appear to be in the cards in the short or even medium term.

Lithium in 2025: A tale of two markets

In contrast, the second half of 2025 saw a boost in prices across the lithium space as market fundamentals improved due to Contemporary Amperex Technology (SZSE:300750,HKEX:3750) curtailing operations at the Jianxiawo lepidolite mine in early August. Despite reports that Jianxiawo would restart operations in December, it is unclear if the mine, which is one of the world’s largest, is back in operation.

Concern over the removed supply pushed carbonate prices higher from mid-October through the end of the year, when they rose from US$10,417.37 to US$14,131.44, a 34 percent increase.

Battery energy storage demand key to lithium growth

Another trend Klein pointed to was the rapid growth in the battery energy storage system (BESS) market, which is expected to grow by 44 percent in 2025, representing a quarter of all battery demand.

“We’ve been talking about BESS being a very fast, growing and big part of the market, but it’s now become the consensus opinion that it’s very strong not only in China, but elsewhere,” said Klein.

Although BESS is one of the fastest-growing segments of the battery market, Klein believes its growth potential is not fully understood. “The market’s probably still underestimating that narrative about battery energy storage,” he said, adding that it is only now starting to be understood by people who are in the industry.

“But for the broader, generalist investor who still equates lithium with EVs, they don’t fully understand the battery energy storage angle, so I think they’re still underestimating that,” said Klein. The market is projected to balloon from US$13.7 billion in 2024 to US$43.4 billion by 2030, growing at a compound annual growth rate of 21.3 percent.

Industry analysts expect BESS installations could expand from roughly 205 gigawatt-hours in 2024 to between 520 and 700 gigawatt-hours by 2030, driven by renewable integration, grid stability needs and declining costs.

While EVs have dominated the lithium narrative, Del Real said the real opportunity was “never just a play on EVs or hybrids — it was a play on grid storage, energy storage,” with cheaper battery cells unlocking faster adoption.

That mispricing has created a contrarian opportunity, he added, noting that lithium’s neglect over the past six months has rewarded patient investors. “It’s lonely in the forest sometimes,” Del Real said. But when sentiment turns, “the re-rating can be spectacularly profitable if you know how to play it.”

Lithium exploration budgets evaporate

Lithium exploration budgets were sharply reduced in 2025 as miners retrenched amid prolonged price weakness.

S&P Global’s 2025 corporate exploration strategies study shows that spending on lithium and other critical minerals exploration fell significantly, even as overall non-ferrous exploration dipped only slightly.

Lithium, which had previously broken the US$1 billion mark for exploration spending, saw its allocation cut as junior companies tightened their belts and delayed programs. Cuts were most pronounced in traditional exploration hubs such as Canada, Australia and the US, where weakened junior sectors hit budgets hardest; meanwhile, regions like Chile, Peru and Saudi Arabia recorded relative gains in broader exploration funding.

Lithium remains a structurally important exploration commodity despite a sharp pullback in spending, Kevin Murphy, director of metals and mining research at S&P Global, said during a December webinar.

Murphy described the metal’s rise over the past decade as a “lithium renaissance.”

Once “completely inconsequential for exploration,” lithium has become the third most explored commodity globally over the past five years, underscoring how central it has become to future-facing supply chains.

However, that momentum stalled in 2025 as ongoing price weakness forced a reset. Murphy said lithium exploration budgets were “absolutely gutted,” falling to roughly half of 2024 levels, a decline he described as expected given depressed prices and the completion of several late-stage programs that wrapped up in late 2024 and early 2025.

“The lithium price has been depressed for too long for the budgets to be resilient,” he said, framing the downturn as cyclical rather than structural.

Lithium stocks stage H2 rally

Speaking at this year’s Benchmark Week event in November, Sean Gilmartin, senior equity analyst at Bloomberg, explained that lithium equities staged a sharp rebound in H2 after years of underperformance.

After lagging broader materials and chemical indexes for much of the first half of the year, lithium stocks surged in the second half of the year, closely tracking rising spot prices.

“Over a three year window, lithium names were still very much lagging,” Gilmartin said, “but we’ve flipped the script in a few months. Year-to-date, we’re seeing on average 47 percent gains, closely aligned with spot markets.”

He attributed the turnaround to stronger-than-expected lithium demand, particularly from BESS, as well as supply curtailments in China, which have tightened the market.

Despite the rebound, he cautioned that volatility remains a defining feature of the lithium equities space.

“You need to have a long-term view, and you have to be very adherent to your thesis,” Gilmartin said, noting that the demand story remains intact and that fundamentals continue to support growth through 2026 and beyond.

Investor Insight

With a tight capital structure, experienced management and strategic gold, silver and copper project locations near major past-producing mines, Questcorp is well-positioned to deliver discovery-driven growth to investors.

Overview

Questcorp Mining (CSE:QQQ,OTC:QQCMF,FSE:D910) is a Canadian junior exploration company focused on unlocking value in two high-potential mineral districts: the Sonoran Gold Belt in Mexico and Vancouver Island in British Columbia.

The company aims to build shareholder value through disciplined exploration of assets with near-surface mineralization and proven geologic continuity. The company operates in mining-friendly jurisdictions, close to infrastructure and within major metal-producing belts. Its flagship La Union gold project offers high-grade gold-silver-lead-zinc potential in Mexico, while the North Island copper project provides exposure to porphyry copper and skarn systems in a district that hosts multi-billion-pound copper resources.

With gold prices near all-time highs and a copper supply crunch emerging, Questcorp is targeting discoveries that can drive exponential value from a tightly held share structure.

Company Highlights

• Flagship Asset – La Union Gold Project (Mexico): A high-grade carbonate replacement gold system in the Sonoran Gold Belt, boasting historical production, strong geologic signatures and drill-ready targets with >80 g/t gold surface samples.
• Copper Exposure in Tier-1 Jurisdiction: The North Island copper project lies just north of BHP’s historic Island Copper Mine. It shows promising porphyry and skarn-style mineralization and is adjacent to Northisle’s multi-million-ounce copper-gold deposits.
• Tight Capital Structure and Strategic Investors: ~93 million shares outstanding with over 80 percent held by long-term, high-net-worth, US and International investors with 3-5 year investment window.
• Execution-focused Management: Led by Founding President & CEO Saf Dhillon, a veteran builder of public companies, and geologist Tim Henneberry, with over 45 years of global exploration success.
• Immediate Catalysts: Near-term exploration at both assets with active permitting, drill programs and news flow expected throughout 2025.

Key Projects

La Union Gold Project – Sonora, Mexico (Flagship Asset)

The La Union gold project is a 2,604-hectare, road-accessible high-grade carbonate replacement deposit (CRD) located at the edge of the Sonoran Gold Belt, one of the richest gold-producing regions in Mexico. The property is located near major mines, including La Herradura (6.7 Moz, measured and indicated) and San Francisco (1.4 Moz, measured and indicated), and boasts historical production from underground operations by Peñoles and others, reportedly yielding ~50,000 ounces of gold in the 1950s at grades of 7 to 20 grams per ton (g/t) gold.

La Union gold project location

Work done to date includes consolidation of seven historical properties into a single district-scale project by Riverside Resources, which invested more than US$2.5 million in geological mapping, sampling and target definition. Sampling has returned high-grade grab samples including 83.2 g/t gold, 4,816 g/t silver, 30 percent zinc, and 19.8 percent lead. Channel sampling and geological work identified eight mineralized zones, three of which – Plomito, La Famosa and La Union – are drill-ready and fully permitted.

Geology and history of La Union

Questcorp executed a definitive agreement with Riverside in May 2025 to earn up to 100 percent interest in the project. The planned Phase I program includes drilling 10 diamond drill holes averaging 300 meters in depth across the three priority targets, alongside geophysical (gravity and EM) surveys to refine targets. Questcorp will also continue surface exploration at the remaining five targets to identify additional drill candidates. The project’s polymetallic nature and porphyry potential at depth suggest significant resource upside. Riverside remains as the operator during the earn-in, bringing proven success in similar deposits such as Alamos Gold’s Mulatos.

North Island Copper Project (NICP) – Vancouver Island, BC

The North Island copper property is an exploration-stage project located on the northern tip of Vancouver Island, approximately 7.5 km northwest of BHP’s historic Island Copper Mine. The Island Copper operation historically produced 1.2 billion kg copper, 35,268 kg gold, 360,800 kg silver, and significant molybdenum and rhenium from 367 million tonnes of ore, underscoring the district’s endowment.

NICP hosts eight documented copper-silver skarn occurrences and displays porphyry-style mineralization associated with the Island Intrusive suite. The property is geologically anchored by two main target areas: skarns associated with Quatsino limestones in the east and a porphyry copper target to the west, known as the Marisa Zone. Historical drilling by previous operators at Marisa intersected broad zones of copper mineralization, including:

• DDH92-01: 0.078 percent copper over 56.39 m, including 0.171 percent copper over 16.17 m
• DDH92-03: 0.041 percent copper over 70.71 m, with increasing grade at depth

Despite promising results, these zones were never followed up. Questcorp intends to revisit and expand on this historic work. The next steps include completing a 3D induced polarization (IP) survey to model chargeability and resistivity anomalies, followed by a focused drill campaign targeting extensions of the Marisa porphyry.

The project benefits from excellent access via the Vancouver Island Highway and logging roads, plus nearby hydro infrastructure, offering low-cost exploration potential. With a favorable neighborhood, including Northisle Copper & Gold Inc. (TSXV:NCX) with a ~$800 million market cap, NICP represents a high-upside copper exploration story in a Tier-1 jurisdiction.

Founding Directors and Management Team

Saf Dhillon – President, CEO and Director

Saf Dhillon has been involved in the development of public companies for over 20 years, holding various positions including investor relations, business development and senior management, as well as board directorships, building an extensive worldwide list of contacts. He was a key member of the Idaho-based US Geothermal’s management team, which grew the company from an approximately US$2 million startup to a successful independent renewable energy power producer with three new power plants operating in the Pacific Northwest. Saf is President & CEO of iMetal Resources Inc. (TSXV:IMR), President & CEO of Bayridge Resources Corp. (CSE:BYRG). He is also a founding director of Torrent Gold (CSE:TGLD), a board member of Lake Winn Resources (TSXV:LWR), and provides assistance to several other private and public companies.

R. Tim Henneberry – Director

R. Tim Henneberry is a professional geoscientist with over 43 years of experience in domestic and international exploration and production for base and precious metals and industrial minerals. He founded Mammoth Geological in 1991, providing geological consulting services to numerous private and publicly traded companies. Henneberry has been involved in senior management of several TSX Venture and CSE-listed companies over the last 30+ years, serving as director, senior officer or advisor, including the founding of several.

Scott Davis – Director

Scott Davis is a partner of Cross Davis & Company LLP, Chartered Professional Accountants, providing accounting and management services for publicly listed companies. His experience includes CFO positions of several companies listed on the TSX Venture Exchange, and his past experience consists of senior management positions, including four years at Appleby as an assistant financial controller. Prior to that, he spent two years at Davidson & Company LLP, Chartered Professional Accountants, as an auditor, and five years with Pacific Opportunity Capital as an accounting manager.

Nickel price in Q4

There wasn’t much change at the start of the quarter; the price was essentially trading in the US$15,000 to US$15,500 range, the same as it had since recovering from the post-liberation day tariff announcement rout in the base metals market in April that sent the price spiraling to a year-to-date low of US$14,150.

Nickel price, December 19, 2024, to December 18, 2025.

Chart via TradingEconomics.

However, cracks began to form at the end of October as it became clearer that the oversupply situation was likely to persist, pushing prices back below the US$15,000 mark by mid-November.

Prices for nickel rebounded in late November, but failed to break the US$15,000 again and slid toward a yearly low, reaching US$14,235 on December 15.

Oversupply continues to weigh on nickel

At the end of the year’s third quarter, the expectation was that nickel prices would carry momentum as the monsoon season arrived in the Philippines; however, despite seasonal declines in output, the market ‘s supply glut persisted, and prices continued to trend lower at the end of the period.

As of September 30, London Metal Exchange (LME) warehouses held 231,504 MT of nickel, and by November 28, stockpiles had grown to 254,364 MT, nearly 100,000 MT higher than the start of 2025.

According to a mid-December Shanghai Metals Market article, refined production decreased by 25,800 MT in November. Still, it was outpaced by inventory accumulation, as downstream demand remained soft.

On the demand side, stockpile buildups coincided with the traditional off-season for stainless steel producers, which accounts for 60 percent of total nickel demand, and weak end-use consumption led some producers to initiate output cuts. Additionally, Shanghai Metals Market notes that stainless demand was further impacted by the superior economics of recycled materials. The outlet also states that although production costs in Indonesia are lower than elsewhere, the price of nickel is rapidly approaching producers’ break-even point.

In February, the Indonesian government changed its quota system, increasing nickel ore output to 298.5 million wet metric tons from 271 million wet metric tons in 2024. The move from the top nickel producer was designed to alleviate supply pressures, with increased production limited to major production areas.

This was followed in October by a change to the length of time production quotas were valid, shortening it to one year from three years, and forcing miners to reapply for previously approved quotas for 2026 and 2027.

Changes were made to the application system after companies failed to meet environmental obligations, and companies will now have to submit proof they have the financial means to remediate land after operations are complete.

Adding to the metal’s woes at the end of the year is demand from the electric vehicle (EV) sector slipping as more battery producers pivot away from nickel in their chemistries, as cheaper lithium-iron-phosphate batteries improve efficiency.

For her part, Manthey, explained that everything has aligned for a bear market.

“LME stockpiles are at a four-year high, with Chinese and Indonesian cathode dominating,” she said, adding that growth in battery metals was slower than expected, and that demand for stainless steel was sluggish on the back of global weakness in manufacturing.

How did nickel perform for the rest of the year?

The rest of the year wasn’t much different for nickel.

The oversupply situation carried over from 2024, with Indonesian producers making up roughly 60 percent of the market. Likewise, curtailments continued among western producers as prices were unable to cover costs.

In April, the Indonesian government made a significant change to its royalty rates, hiking them to between 14 and 19 percent, depending on the nickel price. That’s up from the country’s previously imposed 10 percent flat rate, with a 2 percent royalty on nickel mattes destined for battery production.

As the second quarter began, base metal prices sank amid rising expectations of a global recession following US President Donald Trump’s “Liberation Day” tariff announcement on April 2.

Markets rebounded after their initial tariff plans were walked back, following a bond market squeeze that pushed 10 year treasury yields up by more than half a percentage point.

Nickel faced further pressures in July as the One Big Beautiful Bill was signed into law in the US, ending the federal EV tax credit, as well as other tax credits for expanding charging infrastructure. The change came into effect on September 30 and eliminated a US$7,500 rebate on the purchase of new EVs. Before the end of the tax credit, data showed that American EV sales reached a record 1.2 million through the first nine months of 2025, with the share for EVs climbing to 12 percent in Q3 as consumers made purchases ahead of the program’s end.

Q4 data shows EV sales have declined significantly since the tax credit expired, and interest in EVs has fallen by 20 percent. The fall caused Ford Motor (NASDAQ:F) to pull back on its EV plans and take a US$19.5 billion writedown.

Investor takeaway

Nickel prices continued on a downtrend in 2025, and expectations aren’t much different for the year ahead.

Until the metal see ssustained upward momentum, it’s unlikely that curtailed western operations will be restarted.

For experienced investors, this may offer an opportunity to enter a market closer to the bottom than the top. However, until there is a significant correction in supply and demand fundamentals, the nickel market won’t have much of a tailwind, leading to a riskier market, that may have a lengthy period before returns are realized, if at all.