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Sumitomo Metal predicts that the global nickel market will remain in surplus by 2026

Sumitomo Metal Mining, Japan's largest nickel smelter, said Tuesday that the global nickel market will remain in surplus for a third straight year next year because of Indonesia's continuing production growth.

SMM's half-year outlook for the market projected a surplus of 256,000 metric tonnes in 2026. This is slightly less than 263,000 tons this past year. The production of low grade nickel pig iron in Indonesia is expected to increase 4.1%, to 1.76 millions tons.

The nickel pig iron produced in Indonesia is expected to increase by 10.3% between 2025 and 2025.

SMM predicts that global nickel demand will grow by 2.4% annually to 3.52 millions tons in 2026. This is due to the steady consumption of stainless steel, and supply is expected to rise by 2.0% to 3,78 million tonnes.

Shirou Imai told reporters that the forecast does not assume a significant impact of U.S. Tariffs on Demand, as this has only been a limited effect in 2018.

Imai stated that the growth of demand for batteries is expected to remain modest.

Nickel is used primarily in stainless steel but also in the lithium-ion battery that powers electric vehicles (EVs).

However, demand growth has slowed as lithium-iron-phosphate (LFP) batteries, which are cheaper and contain no nickel or cobalt, gain market share, accounting for two-thirds of EV sales in China in 2023, according to the International Energy Agency.

SMM, a supplier of cathode material for Panasonic lithium-ion battery used in Tesla electric vehicles, anticipates that the global demand for nickel for batteries will rise to 470,000 tonnes next year. This is only a 10,000 ton increase from 2025.

Imai stated that "China is restricting the export of LFP technology, which will increase demand for conventional EV batteries with nickel." Yuka Obayashi reported.

(source: Reuters)