BMI：Stainless Steel Demand to Drive 4.5% Growth in Nickel Demand in 2026

Bloomberg Technoz, Jakarta – Despite Indonesia cutting its nickel ore output quota in the 2026 RKAB, global nickel demand is projected to rise year-on-year by 4.5% in 2026 to 3.7 million metric tons, up from the estimated 3.7% growth recorded last year.

BMI holds that global nickel demand will maintain robust growth even amid supply risks stemming from Indonesia’s slashed nickel ore production quotas. The institute forecasts that the stainless steel sector will underpin nickel demand growth, as evidenced by a 2.5% year-on-year increase in stainless steel output in Q1 2026.

“Our forecast sees global nickel consumption expanding 4.5% year-on-year to 3.7 million metric tons in 2026, compared with an estimated 3.7% growth in 2025, with stainless steel production remaining the core pillar of demand,” BMI stated in its latest report.

According to BMI, rising stainless steel output aligns with demand growth in China, broader Asia and the United States, while stainless steel demand in the European Union stays sluggish.

While stainless steel remains the primary driver of nickel consumption, BMI notes that nickel demand for electric vehicle (EV) batteries is being squeezed by surging uptake of lithium iron phosphate (LFP) batteries. It pointed out that LFP batteries accounted for around 81.2% of all EV batteries deployed in China in 2025, jumping from 67.3% in 2023. Meanwhile, the combined share of high-nickel and low-nickel battery chemistries fell from 30.8% in 2023 to 18.7% in 2025.

“This shift is also spreading across emerging markets outside China, where LFP’s market share climbed from 46.3% in 2024 to 66.5% in 2025,” BMI emphasized.

Nevertheless, BMI projects that strong nickel demand growth will deliver extra price support and help absorb some market surplus, notwithstanding Indonesia’s supply risks. The institute has even revised up its 2026 nickel price forecast from the prior USD 16,600 per metric ton to USD 17,000 per metric ton.

BMI’s report shows the average spot price of nickel metal stood at USD 17,862 per metric ton as of July 7, 2026. It explained that nickel prices embarked on an upward rally in Q1 2026, after Indonesia’s Ministry of Energy and Mineral Resources (MEMR) cut the approved 2026 nickel ore output quota from 379 million metric tons (the 2025 figure) to a range of 260–270 million metric tons. Market bullish sentiment was further bolstered when the MEMR revised the HPM pricing formula to lift the reference transaction price for domestic nickel ore, raising raw material procurement costs for smelters.

BMI highlighted the combined tightening of RKAB quotas, higher HPM reference prices and sulfur supply risks for HPAL smelters pushed nickel prices to hit an annual peak of USD 19,642 per metric ton on May 5, 2026. However, market sentiment shifted after the MEMR signaled it would approve additional nickel ore quotas. This eased fears over raw material supply shortages, dragging nickel prices down to USD 16,250 per metric ton on July 2, 2026.

“The government’s latest guidance aligns with our April view that Indonesia’s RKAB ore quota framework will ultimately be managed flexibly in response to market conditions and downstream capacity needs, lowering the risk of prolonged raw material shortages brought on by overly restrictive policies,” BMI commented.

The MEMR confirmed there will be no large-scale expansion of nickel production quotas within the 2026 RKAB, yet the government pledged to stabilize market balance and avert oversupply. Tri Winarno, Director-General of Minerals and Coal at the MEMR, explained that adjustments to the RKAB will only target refineries currently facing nickel ore supply deficits.

“Let me clarify: nickel production quotas under the RKAB will not be raised except to cover supply shortfalls at smelters that are still undersupplied. That is the sole exception,” Tri told reporters at the MEMR office on the evening of Friday, July 10, 2026. When pressed for specific figures on quota expansions, Tri declined to disclose details, stating the Directorate-General of Minerals and Coal was still tallying total smelter demand to cross-reference against existing approved RKAB quotas.

The cumulative nickel ore production quota outlined in this year’s RKAB stands at 260–270 million metric tons, a steep drop from the actual 320 million metric tons of output recorded last year.