Nickel Stocks: News, Market Analysis and Sector Coverage

Nickel's largest use is in stainless steel production, which accounts for roughly 65 to 70 percent of global nickel consumption. Stainless steel is an alloy of iron, chromium, and nickel (typically 8 to 10 percent nickel) that is corrosion resistant and widely used in construction, consumer goods, food processing, medical devices, and industrial equipment. The second major application is in non-ferrous alloys used in aerospace and defence, where nickel-based superalloys maintain their strength at extreme temperatures. Electroplating uses nickel to provide corrosion-resistant coatings on metal components. Battery applications have grown rapidly as a use category, with lithium-ion batteries for electric vehicles and energy storage systems now representing a significant and growing share of nickel demand, particularly for high-purity class 1 nickel and nickel sulphate. Foundry products, catalysts, and speciality chemicals make up the remaining demand categories.

Indonesia has become the world's dominant nickel producer, accounting for over 50 percent of global mine production following a rapid expansion of laterite mining and processing capacity, particularly through the construction of nickel pig iron (NPI) and high-pressure acid leach (HPAL) facilities. The Philippines is the second largest producer, also from laterite deposits. Russia is a significant producer of class 1 nickel from the Norilsk Nickel operations in Siberia, which process sulphide ore deposits. Canada, Australia, New Caledonia, and China are other meaningful producing countries. Australia's production comes primarily from nickel sulphide operations in Western Australia, which produce high-quality nickel products well suited to battery-grade markets. The geographic concentration of supply in Indonesia and the Philippines, which together supply the majority of global nickel mine production, creates supply chain considerations for downstream industries.

Nickel is broadly categorised into two classes based on purity. Class 1 nickel refers to products with a nickel content of at least 99.8 percent, including electrolytic nickel, nickel powder, carbonyl nickel, and nickel briquettes. These high-purity products are traded on the London Metal Exchange and are suitable for use in battery applications, where high purity is essential for performance. Nickel sulphate, which is directly used in battery cathode manufacturing, is also classified as a class 1 product. Class 2 nickel refers to lower-purity products including nickel pig iron (NPI), ferronickel, and nickel oxide sinter. These products are primarily used in stainless steel production, where the precise purity requirements of battery manufacturing do not apply. The distinction matters for producers because battery demand growth drives premiums for class 1 products, making the ability to upgrade ore into high-purity forms increasingly commercially valuable.

Nickel plays a critical role in the cathode chemistry of certain lithium-ion battery types used in electric vehicles. The most common battery chemistry used in EVs today is nickel-manganese-cobalt (NMC), in which nickel is the dominant component, typically comprising 60 to 80 percent or more of the cathode active material in high-nickel variants. Higher nickel content in the cathode generally translates to higher energy density, enabling greater driving range per unit of battery weight. Another common EV battery chemistry, nickel-cobalt-aluminium (NCA), also relies heavily on nickel. The nickel-iron phosphate (LFP) chemistry, which does not use nickel, has gained market share in some segments, introducing some uncertainty around the long-term nickel demand outlook from batteries. However, in the premium long-range EV segment, high-nickel NMC batteries remain the dominant choice.

Nickel prices have been exceptionally volatile in recent years due to a combination of supply-side disruption and structural demand change. The most dramatic event was the nickel price squeeze in March 2022, when a major Chinese nickel producer who held a large short position was caught by a rapid price spike, leading to a short squeeze that pushed the LME nickel price above 100,000 US dollars per tonne before trading was suspended. Beyond this market dysfunction event, nickel prices have been significantly affected by the rapid expansion of Indonesian low-cost laterite supply, which has increased global nickel availability substantially and put downward pressure on prices. On the demand side, the growth of battery demand has added a new and growing consumption source, but this has been more than offset by supply growth in recent years. The resulting price weakness has put financial pressure on higher-cost nickel producers, including several Australian operations.