Research firm BMI – a Fitch Solutions Company – is revising its 2026 nickel price forecast upwards to $16,600/t from its previous $15,800/t, following an earlier out-of-cycle revision this year. This reflects a structurally firmer price environment despite expectations for prices to continue to moderate.
In its latest ‘Outlook for nickel prices’ report, BMI explains that nickel prices traded at elevated levels in January, reaching year-to-date highs, before losing momentum following the onset of the US–Iran conflict on February 28 as macroeconomic sentiment deteriorated.
While nickel prices remain 2.5% higher for the year-to-date, closing at $17,241/t on April 10, prices have fallen by 4.8% from levels seen pre-conflict as macroeconomic sentiment weakened.
For the remainder of this year, while geopolitical developments in the Middle East are expected to continue influencing market sentiment, BMI says the nickel price outlook is likely to remain dominated by supply-side dynamics in Indonesia.
“We expect the market surplus to widen modestly to around 324,000 t in 2026, as Indonesia continues to add capacity, which should keep prices below recent highs.”
BMI explains that emerging supply-side supports should help to establish a price floor, limiting the risk of a repeat of recent sharp downturns and supporting prices above the 2025 average of $15,161/t, amid domestic policy uncertainty in Indonesia and conflict-related supply disruption risks.
In the first quarter of this year, nickel price dynamics reflected both supply-side risks and macroeconomic developments.
Nickel prices initially moved higher amid a more favourable fundamental backdrop and improving market sentiment, driven by Indonesia’s decision to cap nickel ore mining quotas at 260-million to 270-million wet metric tonnes, down from the 379-million wet metric tonnes sanctioned for 2025.
However, BMI says momentum weakened in recent weeks as geopolitical risks in the Middle East took centre stage, pushing energy prices higher and reinforcing expectations of a more hawkish stance from the US Federal Reserve and other central banks, which in turn dampened sentiment across the metals complex.
Over the past week, the report indicates, momentum has turned again, with the announcement of a US–Iran ceasefire on April 7 easing inflation fears and triggering a broad rebound from the declines seen over the past month.
“While we expect nickel price movements to be driven primarily by supply-related developments in Indonesia, prices are set to remain volatile and highly sensitive to developments in the Middle East.
“Persistent geopolitical uncertainty in the region carries implications for both supply chains and macroeconomic conditions, which are expected to continue shaping price action across metals markets,” says BMI.
It notes that the balance of risks stemming from the conflict is two-sided for nickel prices, with upside risks linked to potential disruptions to key inputs.
Indonesia’s high-pressure acid leach (HPAL) sector – which accounts for a significant share of the country’s nickel production – is highly dependent on imported sulphur.
With about 67% of Indonesia’s sulphur imports sourced from the Middle East, supply disruptions could tighten sulphur availability, raise HPAL input costs and constrain nickel supply growth, supporting nickel prices.
In parallel, BMI adds that heightened energy costs since the onset of the war continue to weigh on nickel production more broadly, impacting both HPAL operations and nickel pig iron producers in Indonesia and globally, with higher-cost producers outside Indonesia particularly exposed.
Collectively, BMI says, these factors reinforce upside risks to nickel prices, although heightened macroeconomic uncertainty and the persistent ongoing supply glut will limit the scope for a sustained return to early-2026 highs.
Against this backdrop, the report says Indonesia-led supply growth continues to underpin nickel price dynamics this year.
It notes that refined nickel production is forecast to grow by 9.8% this year, following growth of 9% in 2025, widening the surplus and limiting the scope for sustained price gains.
BMI says that, while Indonesia’s nickel ore mining quota framework introduces uncertainty, it has historically been managed flexibly in response to market conditions and downstream capacity requirements, reducing the likelihood that policy adjustments translate into a prolonged feedstock shortfall.
As a result, the framework should support nickel prices through improved sentiment around supply conditions, without preventing continued growth in refined output.
Additionally, BMI says any feedstock gaps are expected to be partially offset by nickel ore imports, most notably from the Philippines, with Indonesia’s imports rising from negligible levels in 2021 to 15,800 t in 2025, supporting continued growth in refined nickel production.
“Despite ongoing supply-side risks, nickel prices are expected to remain subdued but structurally better supported, with surplus growth moderating in 2026 and improved supply-side sentiment underpinning a higher year-end level than in 2025.”
BMI says nickel prices will also still find a degree of support from underlying demand, although growth is expected to moderate.
“We now expect global nickel demand growth to ease to about 3% in 2026, from an estimated 5.8% in 2025, reflecting slower incremental growth across key end-use sectors.”
While demand continues to be underpinned by the clean-energy transition and stable stainless steel production, BMI notes that softer momentum in emerging sectors is expected to weigh on overall growth.
It explains that mainland China will remain the largest contributor to global nickel demand growth this year, as in 2025, but the pace of expansion is likely to slow.
While clean-energy-related demand, including electric vehicles (EVs) and renewables, continues to expand, BMI says growth is expected to be less pronounced than in 2025.
Outside mainland China, BMI says nickel demand growth this year is expected to be driven primarily by clean-energy-related sectors.
However, the report indicates that the recent escalation of tensions in the Middle East – and the fragility of the current ceasefire – has increased downside macroeconomic risks through higher energy prices and elevated market volatility.
“For now, we continue to expect positive demand growth across key developed markets such as the EU and US, as well as emerging markets including Indonesia and India.
“However, we remain vigilant to developments in the Middle East, with risks skewed to the downside that could prompt downward revisions to our growth forecast.”
Meanwhile, the report notes that battery chemistry shifts also pose a significant headwind to nickel demand this year.
BMI explains that the adoption of non-nickel chemistries – especially lithium-iron-phosphate (LFP), favoured for lower cost, safety and longer cycle life – continues to outpace earlier expectations, while buyers are gravitating toward plug-in hybrids over full battery EVs.
In 2024, LFP’s share climbed to 75% in Mainland China (from 62% in 2022) and to 50% globally (from 38% in 2022), with high-nickel chemistries dropping to 25% in China (from 34% in 2022) and to 46% globally (from 54%), according to the International Energy Agency.
BMI argues that this mix shift is likely to keep sentiment subdued and temper nickel demand growth despite broader macroeconomic tailwinds.
LONG-TERM OUTLOOK
In the longer term, BMI says, it holds a more optimistic nickel price outlook as the market surplus narrows on the back of surging demand, supported by growth in the stainless steel sector and the acceleration of the clean energy transition.
It forecasts prices to peak at $22,000/t in 2032 as the market tips into deficit.
The transition to clean energy technologies, including renewable-energy systems and the EV market, presents significant upside for nickel demand.
BMI says this trend is anticipated to gain momentum over the coming years, further reinforcing the positive long-term trajectory for nickel prices, given that nickel is a vital input in these technologies.
“The EV market will be a strong source of new demand. Nickel is also increasingly used in battery storage systems and in components for wind turbines.
“That said, we flag that the dominance of nickel-manganese-cobalt batteries faces growing challenges from emerging battery chemistries, notably LFP.”
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