The global nickel market is expected to remain in surplus next year as Indonesian output recovers on potentially higher mining quotas and lower sulphur and sulphuric acid prices, Japan’s top nickel smelter Sumitomo Metal Mining (TYO: 5713) said on Tuesday.
SMM forecasts a global nickel surplus of 34,000 metric tons in 2027, narrowing from 38,000 tons this year. Indonesian production of low-grade nickel pig iron (NPI) is expected to rebound 11.9% to 1.88 million tons, according to the company’s half-year market outlook.
Indonesian NPI production is seen falling 2.3% in 2026 after rising 12.4% in 2025 due to government cuts in mining quotas. Indonesia accounts for more than 60% of global nickel output.
Potentially higher mining quotas could boost NPI output, while lower sulphur and sulphuric acid prices, key inputs in nickel production, could increase production of nickel intermediates such as mixed hydroxide precipitate, SMM General Manager Shirou Imai told reporters.
Global nickel demand is forecast to rise 6% to 3.92 million tons in 2027, supported by steady stainless steel consumption and rising demand for speciality steel used in AI data centres. Supply is seen rising 5.8% to 3.96 million tons.
“In 2027, we anticipate that a recovery in NPI production will ease the shortage of Class 2 nickel, while the continued decline in Chinese cathode production will soften the surplus of Class 1 nickel,” Imai said, adding that the overall market would remain in surplus.
Class 1 nickel is high-purity refined metal used in batteries and other applications, while Class 2 mainly comprises NPI and ferronickel used in stainless steel.
SMM, which supplies cathode materials for Panasonic (TYO: 6752) lithium-ion batteries used in Tesla (NASDAQ: TSLA) EVs, expects global nickel demand for batteries to rise to 620,000 tons next year from 560,000 tons in 2026, driven by continued growth in Chinese EV sales.
(Reporting by Yuka Obayashi. Editing by Mark Potter)
