The global nickel market is set to end 2026 in a slight surplus, marking a significant reversal from forecasts made six months earlier, according to the International Nickel Study Group. This reversal represents a major shift in market expectations, as the INSG had previously forecast a deficit of 32,000 tons in April—which would have been the first annual shortfall since 2021. The INSG announced its updated projections following two days of meetings among government and industry representatives from member countries held in Lisbon on Tuesday.
According to the group's latest forecast, global demand for primary nickel is expected to reach approximately 3.85 million metric tons in 2026, representing growth of 7.6% compared to the previous year. Production is forecast at 3.87 million tons, resulting in a market surplus of 19,000 tons for the year. The INSG's revised demand figure for 2026 has increased from the 3.75 million tons previously projected in April, while production estimates have risen from the earlier forecast of 3.72 million tons.
This upward adjustment reflects changing market conditions and improved visibility into both supply and consumption patterns. Primary nickel serves two major end markets: the stainless steel sector and rechargeable battery applications. The INSG expects the stainless steel sector to expand further during the second half of 2026 and throughout 2027, signaling sustained industrial demand.
However, the group noted that nickel's role in the electric-vehicle battery market has grown more slowly than anticipated, primarily due to increased competition from lithium iron phosphate battery technology, which does not require nickel. The surplus conditions are expected to intensify in 2027. The INSG forecasts that the nickel surplus will widen to 70,000 tons next year, with demand projected to reach 4 million tons and production expected to rise to 4.07 million tons.
This widening oversupply trajectory suggests sustained downward pressure on prices throughout the forecast period. Production dynamics are being influenced by policy decisions in key producing regions. Indonesia, which holds the position as the world's largest nickel producer, has approved lower nickel ore production quotas for 2026 compared to the previous year.
The INSG also noted that applications for 2027 production quotas can be submitted until November 15, indicating that future production levels remain subject to regulatory oversight. The shift from anticipated deficits to surpluses reflects a complex interplay of factors including improved production capacity, moderating growth in battery demand, and robust stainless steel consumption. These dynamics will likely continue to shape nickel prices and investment decisions throughout 2026 and 2027.
Source: International Nickel Study Group (INSG), Reuters via Kitco News
Source: kitco.com