Recording date: 13th February 2025
The nickel market has maintained remarkable stability, trading between $15,000-15,800 since December 2024, with London Metal Exchange (LME) inventories showing only modest increases of 4,000 tons despite analyst predictions of significant surpluses. This stability through the Chinese New Year period suggests underlying market strength.
Indonesia's strategic decision to maintain ore supply at 200-220 million tons indicates a measured approach to market management. This comes as the Philippines introduces legislation for a five-year ore export ban, though industry experts suggest limited impact due to decades of high-grade ore depletion. According to Mark Selby, CEO of Canada Nickel, the Philippines' move comes too late: "They should have probably done this 20 years ago, when they still had some higher grade material left."
The global nickel landscape is significantly influenced by China's approximate 70% beneficial ownership of Indonesian nickel projects, creating supply chain concerns for Western manufacturers. This concentration has prompted Western nations, particularly the US, to seek alternative supplies for their aerospace, defense, and automotive industries. Selby emphasizes that "China is still Enemy Number One," noting that Western car manufacturers are actively avoiding dependence on Chinese-controlled supply chains.
In response to potential tariff scenarios, companies are diversifying their market exposure. European markets, especially those prioritizing low-carbon materials, present viable alternatives to US markets. Middle Eastern interest in nickel projects has also increased, broadening market opportunities.
The sector has attracted significant investment, with notable transactions including Power Nickel's $40 million raise, Magna Metals' $25 million financing, and several smaller deals. Canada Nickel secured $3 million in government funding for IP carbonation work, highlighting growing public sector support for strategic nickel projects.
The investment thesis for nickel remains strong, driven by several factors: secure supply concerns as China dominates Indonesian production, Western manufacturers seeking non-Chinese supply sources, anticipated supply pressure from the Philippines' export ban, and growing demand from EV, aerospace, and defense sectors. Premium pricing for low-carbon nickel production and alternative markets in Europe and the Middle East provide additional upside potential.
As the nickel market undergoes this transformation, investors are advised to focus on companies with assets in stable jurisdictions, proven management teams, and clear paths to production, while maintaining awareness of the broader geopolitical context affecting the sector.
Sign up for Crux Investor: https://cruxinvestor.com/categories/commodities/nickel